Publication date: September 25, 2024

In the Sept. 20 article, we focused on the state of the German auto industry, highlighting Volkswagen. We are not going to cover all imaginative German car brands, but today in this article we would like to give you an overview of the situation and capabilities of the proud BMW. 

First a brief further introduction of this well-known car brand from Munich. BMW was founded in 1913 and now has more than 150,000 employees. It is Germany's third largest car brand in terms of sales after Volkswagen and Opel. Fun fact is that BMW also owns the famous Rolls-Royce and the hip Mini. BMW sells about 2.5 million cars a year, mainly in China and the US.  

In the period from April to the end of September this year, BMW's share price fell more than 33%, sharing heavily in the decline the German auto industry is experiencing this year.
 
In this article we examine BMW's situation and, above all, assess the opportunities for investors.

What's going on with BMW?

BMW is currently facing several major issues affecting its global business. One of the main concerns is a recall involving 1.5 million vehicles due to problems with their integrated braking systems. This defect affects models produced between 2023 and 2025, including several series and SUVs such as the X5 and X7. The recall has led to disruptions in vehicle deliveries and dealer operations

In addition, BMW is recalling more than 140,000 Mini Cooper SE electric vehicles due to concerns about possible battery overheating, which could lead to thermal overheating. This recall mainly affects vehicles produced between 2020 and 2024.

These concerns have caused BMW to lower its profit expectations for 2024, as the company expects significant warranty costs and demand will decrease in key markets such as China.

The development of BMW in a chart

Below you can see BMW's price chart from 2017. Clearly visible is the dip at the COVID19 breakout in 2020 and the rebound to mid-2021. Furthermore, we see that the group's share price has been setting a double top since the end of 2022 and completing the full M pattern. The crucial inquiry, naturally, is whether this M pattern will be succeeded by a W pattern, leading to a potential further decline in the price. We'll delve into that shortly. 

For the complete technical picture, below you will find BMW's price performance plotted against Volkswagen(dark red line) and plotted against the development of the German auto industry (purple line). It is clear that BMW is moving up nicely with the industry and that Volkswagen has lagged far behind since the end of 2022.
 

What can we expect from BMW's stock price

In last week's article, we concluded that at Volkswagen, the problems now seem to be largely behind us, which presents opportunities. At BMW, however, the situation is different. BMW is also struggling with operational challenges and facing declining electric vehicle (EV) sales, as well as a recent profit warning. Nevertheless, the share price is not at its lowest point; the technical support at €68 continues to hold up well.