BMW

Analysis of BMW share price

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BMW expects results to rise in 2021

22/03/2021 - 12h47

Like its rivals in the sector, BMW reported a lower annual profit in 2020. But the group expects better results in 2021.

Elements that can influence the price of this asset:

Analysis N°1

The rise in the price of fuel that has been experienced over the last few years together with the general economic instability means that the new hybrid vehicles developed by BMW could enjoy a real success with the consumers together with future vehicles that use alternative types of fuel that offer a reduction in CO2 emissions.

Analysis N°2

The green vehicles developed by the group could also benefit from the current consumer awareness worldwide relating to ecology and the increasing severity of various governments concerning the reduction of the impact of motorised vehicles on pollution.

Analysis N°3

The group could also benefit more from its numerous technological innovations, notably relating to autonomous and smart vehicles using embedded and online technology. BMW has in fact invested heavily in this sector during recent years and benefits from an advanced position against its competitors.   

Analysis N°4

The BMW group could start to implement strategic partnerships with other automobile construction companies in the coming years and thereby significantly increase its part of the market worldwide. This strategy could notably enable it to penetrate markets that were previously inaccessible. 

Analysis N°5

The current increase in the price of commodities could be an impediment to the growth of the automobile construction industry due to smaller profits and higher production costs. 

Analysis N°6

The group is also experiencing fluctuating competition from other automobile construction companies particularly from developing countries.  The markets in these countries are becoming saturated and the prices charged by BMW make them less competitive than the majority of other automobile constructors.

Analysis N°7

The foreign exchange market can also negatively influence the BMW financial results due to the movements of the Euro against other major currencies; this could greatly diminish its profits.

Analysis N°8

The group has also recently undergone a recall of its high range products due to various dysfunctional problems; this has contributed to tarnishing the brand image of this company in the eyes of its consumers who are highly exigent in the upmarket sector. It goes without saying that any other future problems will have an equally negative effect on this asset. 

Analysis N°9

The price of fuel could also rapidly decrease due to an increase in the extraction of shale gas. Therefore, electric vehicles could also lose their appeal and a decrease in their popularity will have consequences as the BMW group has invested heavily in its green vehicles. 

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General presentation of BMW

The German company BMW or Bayerische Motoren Werke is one of the biggest specialist in the design, manufacture and sale of high end vehicles. Its activities include mainly the sale of cars which generates 91% of its turnover, but also the financing of car purchases and the sale of motorcycles.

Thanks to its 29 production sites, its activities extend all over the world but mainly in Western Europe in countries such as France.

BMW share price is currently listed on the Deutsche Boerse AG Prime Standard Market in Germany. BMW is also part of the German DAX30 stock market index.

Analysis of BMW share price
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The major competitors of BMW

Let’s now proceed to a complete presentation of the industry in which the BMW Group operates with a presentation of its main competitors in the market:

Daimler

First of all, the Daimler Group is a German group that is also an automobile and truck manufacturer and a financial services provider. This group was created by the merger in 1998 of Daimler-Benz and Chrysler. The Chrysler branch will then be renamed Daimler in 2007 following poor results.

Ford

The Ford group which is officially known as Ford Motor Company or FMC and is an American automaker which is based in Dearborn in the suburb of Detroit, Michigan.

General Motors

Of course, we will also closely follow the General Motors group, which is an American automobile manufacturer also based in Michigan in the United States and which controls some fifteen different automobile brands. This group was notably the largest automobile manufacturer in the world between 1931 and 2005 and in 2011.

Hyundai Motors Group

This other Korean car manufacturer is notably the only independent car manufacturer in this country and is the market leader in Korea. Since 2010, this group has succeeded in becoming the fourth largest manufacturer in the world by including its subsidiary Kia Motors.

Nissan

Since its association with Renault in 2012, the Japanese group Nissan has also been one of the largest car manufacturers in the world. He was once known as Datsun and is still based in Yokohama today. The Renault-Nissan alliance is one of the leaders in this industry in terms of the number of cars produced. Let us recall here that Nissan holds 15% of the capital of the French group Renault and the Renault group holds 43.4% of the capital of the Nissan group.

Toyota

Of course, we will also take into account the Japanese competitor Toyota Motor Corporation which is based in the city of the same name, Toyota. It is one of the largest automakers in the world in terms of financial performance ahead of Daimler and Volkswagen. In terms of the number of vehicles sold, the Toyota group is still currently the leader in its market.


The major partners of BMW

BMW, just like many other companies of the sector, bases its strategy of development on the creation of specific and targeted partnerships. By partnering with other companies, it can improve its presence in the market and become more visible to consumers.

Toyota

In 2013, BMW partnered with Toyota, a direct competitor, in order to develop a fuel batery vehicle system which includes not only the battery and the fuel cell system, but also a hydrogen storage tank, the electric motor and a battery.

PSA

It should also be noticed that BMW was a partner of PSA until 2013 concerning the manufacture and design of the engines of their vehicles.

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The factors in favour of a rise in the BMW share price:

If the BMW shares interest you and you are thinking of taking a long position on the share price of this asset then you should take the time to analyse the strengths and weaknesses of this company. Here then we shall first examine in detail the advantages that could cause a rise in the share price of this company on the stock markets:

Firstly, it should be remembered that the BMW group benefits from a solid reputation worldwide; it was in fact recognised as the most internationally reputable company by Forbes magazine in 2012. This reputation for high quality was obtained by BMW through its effective commercial strategy and the consumers have also learnt to appreciate the brand image of this company. BMW is currently the third most popular automobile sector company worldwide according to recent polls.

The BMW group can also be differentiated from its competitors through a respectful environmental technology. In fact, the group has implemented technological innovations and developments that are highly respectful of the environment, working particularly in advanced sectors such as alternative new fuels including hydrogen. The group currently has over 20 models of low emission vehicles with CO2 levels of less than 140 grams per kilometre. Since 2013, BMW has also become one of the pioneering companies in the sector of 100% electric vehicles.

The BMW group can also count on its highly qualified workforce to produce vehicles of a high standard using superior quality materials. In fact we note that the BMW group is at the top of the list of the most highly qualified automobile assembly factories worldwide, particularly in the United States and Germany. It must be said that BMW does everything possible to be a popular employer with its employees due to its major social responsibility. The company has particularly invested heavily in the health management of its employees, as well as professional balance and the quality of the professional life of its workers as well as its engagement in environment protection.

Still concerning the positive points of the BMW group, we can mention the high quality products of this group which has become a brand renowned worldwide for its superior quality engineering. The group invests heavily in research and development in order to produce vehicles that are innovative and respond to the needs of its clientele.

Finally, the BMW group offers its clients a high quality and extremely competitive customer service. In fact, the company works continuously on it after sales customer service to answer questions and respond to the problems and needs of its clients. In this way it reinforces its brand image and reputation and applies a loyalty strategy that is particularly effective over the long term.

The factors in favour of a drop in the BMW share price:

Although the BMW group offers numerous advantages in facing the future, it is also subject to certain weaknesses that we will examine here in more detail.

Firstly, it is important to remember that the BMW group is subject to a high cost structure relating to the production of its luxury and up market range of vehicles, as well as the salaries of its qualified work force, and also the purchase of new technological components. Due to the combination of these expenses the group is therefore subject to higher production costs than its major competitors, which of course affects the group’s profitability. 

Due to this high cost structure, the BMW group is obliged to exercise a more expensive sales price policy than its competitors, particularly in relation to the luxury vehicles sector, which makes it less competitive and causes a loss in its part of the market sector.

Despite efforts to achieve an expansion based on the strategic acquisition of companies we note the lack of strategies based on these acquisitions and the lack of mergers and alliances that could be advantageous for the company’s growth and development. It is therefore not the lack of partnerships that is the problem but rather their quality.

Finally, the limited brand portfolio of the BMW group with only three major vehicle brands; BMW, Mini and Rolls Royce, is another of its weak points against the competition. We also lament the lack of differentiation in the brand portfolio and its negative impact on the long term growth of the company. The group is notably absent from the middle range automobile market which renders it quite exposed to the current economic crisis.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

How has the BMW share performed lately?

It is interesting to know how the BMW share has performed in recent months and years. Thus, over a period of 5 years, the performance of this share has been - 45.37%. Over three years, it was -30.71%, over two years -27.67% and over one year -13.87%. However, there was a positive performance over the last three months with a gain of 37.22% and a rise of 6.67% over the last month, i.e. June 2020.

What is the risk level of the BMW shares?

It is also useful to know the level of risk that the BMW shares represents in the more or less long term before implementing your strategy. Thus and in the short term, i.e. over a month, this level is 36.27%. It passes to 59.05% over three months and 54.99% over 6 months. However, over the longer term, this level of risk drops to 29.71% over 3 years and is 33.64% over 10 years.

Where are BMW shares currently listed?

As mentioned in this article, the BMW share price is currently quoted on the Frankfurt market, i.e. on the Deutsche Boerse. Indeed BMW is a German group and the company is also part of the German national index of reference, the DAX 30 and thus of the 30 largest capitalizations of the country. But this share is also listed on the NASDAQ.

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