Analyst: Dump BMW!

Bertel Schmitt
by Bertel Schmitt

While other carmakers are treading water or worse, BMW’s global sales were up 9.1 percent for the first five months of the year, mostly on strong gains in China. That party is about to end, claims Citi Investment Research and downgraded BMW AG from “buy” to “neutral,” Reuters reports.

In the euphemistic world of stock analysts, a “neutral” usually means a sell.

“It would seem the emerging markets story driving BMW’s share price is finished for now,” Citi analysts wrote in a research note. In its home market Europe, BMW’s growth is arrested. EU sales were down 5.9 percent in May, and are down 1 percent in the first five month of the year. Citi figures that the growth elsewhere can no longer make up for the widening decreases at home.

Other experts think the bearish sentiments are bull.

Nissan’s CEO Carlos Ghosn today warned against counting China out. It is true that growth slows in China, however, “the smaller growth in China still exceeds the growth elsewhere.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Stuntmonkey Stuntmonkey on Jun 26, 2012

    “The smaller growth in China still exceeds the growth elsewhere.” Which is true, but you'd think that people would be wary about growth numbers in a country where the growth is still centrally planned. 'State capitalism'... with the government invested in so many industries, it's really a matter of saying "You there, grow 8% this year!" ... hence why there is so much construction ahead of demand. Build empty developments...whole cities.. and wait for economic activity to fill it in. It sort of works because there is so much room to grow, but the party will end sometime. Who knows when. From what I'm hearing, real world inflation is much higher than what the numbers are telling right now... this is true for any country since people tend to cherry pick what they put in the basket for inflation indexes, but here in Vancouver, you can feel the slowing of the hot Chinese money in the property market, and that's tied to global circumstances. China is a growth opportunity, but as things get desperate for some companies, it will probably go further and turn into a business case. Rationally appealing, but potentially fraught with peril.

  • Tstag Tstag on Jun 26, 2012

    BMW can marvel at the growth it's enjoyed over the last decade but how much more can it grow sales from its existing range of cars. It seems to me they need another brand. The I cars will not be the answer because they will be too expensive to boost revenue or growth significantly, time then for BMW to find another brand.

  • Beerboy12 Beerboy12 on Jun 26, 2012

    That a case of the pot calling the kettle black! Citi bank calling BMW a poor investment, the nerve.

  • Robert Gordon Robert Gordon on Jun 26, 2012

    Out of interest, what happened to the final story in the BMW 'M' life history?

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