Founded in 1916, Bayerische Motorenwerke (BMW) manufactures automobiles and motorcycles in the premium segment. BMW owns a strong portfolio of prestigious brands (BMW, MINI and Rolls-Royce) and has the ambition to become the leading producer of premium cars and services for individual mobility.
BMW is gathering about 20 % of the total premium car market; the premium car market represents an annual volume of around 1.5 million units. The company also operates a financing business for leased cars. The company benefits from a high reputation and it is well ranked in the international car market, well ahead of Mercedes Benz. Yet, the automotive market is highly influenced by economic cycles and the investment risks associated are therefore above average.
In terms of sales growth, the company is unlikely to grow much and fast, one should rather expect stable figures for the years ahead. However, given it has a premium brand portfolio, the company is able to generate profit margins well above the one of the competition. In this respect it outperformance the mass-market manufacturers multiple times.
The key risks for the company include: a) short-term: slowdown in the Asian market (especially in China), b) overhaul of its complete offering to meet new ecological standards (emission standards) and expectations , and c) ever stronger currency movements makes the product pricing more complex. At present, higher dollar sales compensate for the lower growth achieved in China.