This will not end well for BMW

[Swampgator]

And yet you conveniently glaze over the fact that BMW has increased overall vehicles sales over the same time period.

Or that the X3 went from 30k units a year to over 70k over the last five years. During the same five year period, prior to the T3, the 3-series halved it's sales. But I suspect you will resort back to the sales of a single vehicle, not look at the market shifts and think that a company that has limited factories, production capacity and model variation is going to somehow wipe out the industry in two years.

Yes they have increased sales. All from the light truck side. That was the point of this thread. All of the increase has come from the side of the business Model Y is now competing against. If they lose significant sales on the light truck side, they are dead.

 

[Shark2222]

OP's claim about BMW being bankrupt 2 years from now is laughable, and makes me question everything else he is saying.

As other's have pointed out he conveniently ignores the facts that dispel his claims.

One need not even bring the German government into the equation. Even if the virus kills BMW's sales by 50%, their financials clearly show there's no way BMW would be close to bankrupt in two short years.

Does anyone really think no one will be buying ICE two years from now? Yes, EV is the future, and I am enthusiastic about Tesla, but sorry it's not happening that quick! And it sounds like the OP has little insight into how dramatically different the vehicle business is outside North America.

If you look a the history of tech, much more often than not you see past innovators not being the leading innovators going forward. Someone else mentioned EV tech is "in it's infancy". If you look out 5 years I think it's most likely the greatest breakthroughs in EV tech and self driving are likely to come from companies that are not even on our radar screen yet. That's what history shows us is the most likely scenario.

 

[voyager]

Didn't the LAPD order a bunch of BMWs i3 which are now lingering unused on a closed off parking lot?

 

[Swampgator]

OP's claim about BMW being bankrupt 2 years from now is laughable, and makes me question everything else he is saying.

As other's have pointed out he conveniently ignores the facts that dispel his claims.

One need not even bring the German government into the equation. Even if the virus kills BMW's sales by 50%, their financials clearly show there's no way BMW would be close to bankrupt in two short years.

Does anyone really think no one will be buying ICE two years from now? Yes, EV is the future, and I am enthusiastic about Tesla, but sorry it's not happening that quick! And it sounds like the OP has little insight into how dramatically different the vehicle business is outside North America.

If you look a the history of tech, much more often than not you see past innovators not being the leading innovators going forward. Someone else mentioned EV tech is "in it's infancy". If you look out 5 years I think it's most likely the greatest breakthroughs in EV tech and self driving are likely to come from companies that are not even on our radar screen yet. That's what history shows us is the most likely scenario.

Respectfully, BMW net profits were DOWN 28% in 2019. Their own guidance is for them to decrease again this year.
Have you followed their financials?
2/3 of BMW groups assets are plants, land, and equipment. The plants and equipment are basically stranded ICE assets. It will cost a LOT of cash to convert to EVs in order to compete with Tesla, but also to follow EU guidelines or face large fines.
BMW has not released their Q1 results (May 6th) but end of 2019 they had 13 billion in cash on hand. They have already commitd to spending half of that on EV conversion. Tesla, as small as they are in operational volumes, had 8.3 billion. TSLA does not need to spend cash on old tech.
I'll admit I am a Tesla fan, although I have owned a BMW. Still, BMW is in trouble, and they know it.

 

[Shark2222]

Respectfully, BMW net profits were DOWN 28% in 2019. Their own guidance is for them to decrease again this year.
Have you followed their financials?
2/3 of BMW groups assets are plants, land, and equipment. The plants and equipment are basically stranded ICE assets. It will cost a LOT of cash to convert to EVs in order to compete with Tesla, but also to follow EU guidelines or face large fines.
BMW has not released their Q1 results (May 6th) but end of 2019 they had 13 billion in cash on hand. They have already commitd to spending half of that on EV conversion. Tesla, as small as they are in operational volumes, had 8.3 billion. TSLA does not need to spend cash on old tech.
I'll admit I am a Tesla fan, although I have owned a BMW. Still, BMW is in trouble, and they know it.

The notion that BMW will be in bankruptcy in 2022 is absurd.

What are you projecting their profit will be this year? And for 2021 and 2022?

Continuing to spout out their profit was down 28% last year without more detail does not mean a whole lot on it's own. Funny how you don't mention the major reason it was down 28%. Also, does it have anything to do with how profitable they were the prior year?

Explain to us how the plant and equipment balance they have on their books today has anything to do with your projected 2022 bankruptcy. Even if they were going to be forced to take huge asset writedowns, that does not contribute toward a bankruptcy situation.

And ICE plants are stranded assets? Sounds like you forgot what Tesla did in Fremont. ICE sales are not going to be contributing to profit two years from now? And you don't think a substantial amount of equipment used in ICE plants can be used in EV plants?

And what does Tesla's current financial position have to do with projecting a 2022 BMW bankruptcy?

No one is saying BMW does not have huge challenges. By their own admission they do, and it's not difficult to understand why.

But BMW knows they are in trouble? Says who? You are just making it up.

I'm a car guy as well as a financial analyst, but I have no allegiance whatsoever to any manufacturer. I have no reason to defend BMW. But when I hear someone claiming BMW will be in bankruptcy two year from now, I feel a need to point out such a claim for what it is...nonsense. FCA (and whoever they might merge with), Mazda, Ford, and GM all have higher chances of bankrupcy in the next two years than BMW has, and I doubt any of them will be facing bankruptcy in the next 2 years despite our current situation.

 

[jbcarioca]

I must argue against myself in a limited way. BMW and most other major ICE-dominant builders, will face crucial headwinds, exacerbated by competition from more resilient ones, like Tesla. A cursory look shows TSLA to be the strongest financially of teh entire lot, bizarre though that is. Because TSLA is the most vertically integrated they will be harmed less by failing Tier One suppliers than will the others, including BMW.

As for bankruptcy; that or another form of reorganization is highly likely for many OEMs including BMW. That does NOT mean they go out of business. It does mean they'll shed a good deal of dead weight, the shareholders will lose, debt holders will lose, but the companies will go on.

The present situation will end out something like The Great Depression in 1930's or, if we're very lucky, something closer to 1958 or 2008. Weak brands will disappear like SSangyong and some FCA brands. BMW will survive this as an independent, I think, although I'd not be surprised to see Rolls-Royce to end. VAG, by contrast, might lose half or more of their brands. BMW will keep Mini and will transform nicely. The Quandt family might not do so well as will the company they now control.

One very possible outcome could well be a forced combination of designated survivors. The BMW brand could well end out there. As we all know we are in uncharted territory.

 

[Shark2222]

I must argue against myself in a limited way. BMW and most other major ICE-dominant builders, will face crucial headwinds, exacerbated by competition from more resilient ones, like Tesla. A cursory look shows TSLA to be the strongest financially of teh entire lot, bizarre though that is. Because TSLA is the most vertically integrated they will be harmed less by failing Tier One suppliers than will the others, including BMW.

As for bankruptcy; that or another form of reorganization is highly likely for many OEMs including BMW. That does NOT mean they go out of business. It does mean they'll shed a good deal of dead weight, the shareholders will lose, debt holders will lose, but the companies will go on.

The present situation will end out something like The Great Depression in 1930's or, if we're very lucky, something closer to 1958 or 2008. Weak brands will disappear like SSangyong and some FCA brands. BMW will survive this as an independent, I think, although I'd not be surprised to see Rolls-Royce to end. VAG, by contrast, might lose half or more of their brands. BMW will keep Mini and will transform nicely. The Quandt family might not do so well as will the company they now control.

One very possible outcome could well be a forced combination of designated survivors. The BMW brand could well end out there. As we all know we are in uncharted territory.

All good points, except I wonder if Mini survives. But do you agree with the OP BMW will be bankrupt in 2022? That's the claim I find to be totally unsupportable.

 

[Sunshine State]

BMW still has the looks of an SUV. So, it depends on how the consumers accept the CUV platform over the SUV platform.

I much prefer the inside of the Model 3 over the X3. A family member just purchased an X3 - I find it very confusing inside.

Hmmm, a friend has a BMW dealership and they just offered me a 1,500 mile 2020 AWD 3 that was traded in on a new 3 series because the owner felt the Model 3 was too confusing. Buyer took a $12k loss on the Model 3. Not all perceptions are the same and I’d find it highly unlikely BMW is in panic mode. The BMW dealer/customer purchase/service experience is far superior to Teslas. Every new BMW I have purchased is in pristine condition and every new Tesla I have purchased needs cleaning and detailing as well as paint correction.

 

[Mo City]

If you look a the history of tech, much more often than not you see past innovators not being the leading innovators going forward. Someone else mentioned EV tech is "in it's infancy". If you look out 5 years I think it's most likely the greatest breakthroughs in EV tech and self driving are likely to come from companies that are not even on our radar screen yet. That's what history shows us is the most likely scenario.

First of all, I agree BMW won't be bankrupt in 2 years. That is silly talk. Ford? Hmm.

It should be evident to all by now the transition to EVs will be gradual and ICE sales will dominate for quite some time. Trains do not accelerate quickly but they don't require lightening speed to achieve irresistible momentum.

Regarding what I quoted above, the auto industry has very high barriers for entry. It's likely the companies we know today will continue to dominate in some form or fashion 5 years from now. It could be an obscure company has a breakthrough but a bigger fish will swallow it.

 

[jbcarioca]

All good points, except I wonder if Mini survives. But do you agree with the OP BMW will be bankrupt in 2022? That's the claim I find to be totally unsupportable.

NO, I think it is likely that the eventual solution will probably not involve anything quite like a US Chapter 11. History strongly suggests a forced or unforced merger, some from of public shareholding in exchange for funding. Imagining a specific bankruptcy is harder. FWIW, I will be unsurprised in Ford or GM becomes bankrupt. For FCA and PSA I expect probably a non-bankruptcy solution. Looking around the world we may be assured that there will be differing solutions, involving governments to be sure, but only minor brands will disappear this time. The trick is defining 'minor', which will be seen individually.

My speculations: Lancia, Dacia, Lamborghini, Bugatti, a dozen or more Chinese brands, Suzuki, Mitsubishi, perhaps even a few more widely distributed ones such as Mazda. Dead losers such as SSangyong will be gone. Many of those less popular brands will end out as badge engineered versions, rather like most large manufacturers already do, but they'll eliminate distribution costs by redefining many brand distinctions. BMW may have the least such distortions of any significant independent ICE maker, but they'll eliminate a good many of their existing plethora of global model distinctions.

 

[Swampgator]

The notion that BMW will be in bankruptcy in 2022 is absurd.

What are you projecting their profit will be this year? And for 2021 and 2022?

Continuing to spout out their profit was down 28% last year without more detail does not mean a whole lot on it's own. Funny how you don't mention the major reason it was down 28%. Also, does it have anything to do with how profitable they were the prior year?

Explain to us how the plant and equipment balance they have on their books today has anything to do with your projected 2022 bankruptcy. Even if they were going to be forced to take huge asset writedowns, that does not contribute toward a bankruptcy situation.

And ICE plants are stranded assets? Sounds like you forgot what Tesla did in Fremont. ICE sales are not going to be contributing to profit two years from now? And you don't think a substantial amount of equipment used in ICE plants can be used in EV plants?

And what does Tesla's current financial position have to do with projecting a 2022 BMW bankruptcy?

No one is saying BMW does not have huge challenges. By their own admission they do, and it's not difficult to understand why.

But BMW knows they are in trouble? Says who? You are just making it up.

I'm a car guy as well as a financial analyst, but I have no allegiance whatsoever to any manufacturer. I have no reason to defend BMW. But when I hear someone claiming BMW will be in bankruptcy two year from now, I feel a need to point out such a claim for what it is...nonsense. FCA (and whoever they might merge with), Mazda, Ford, and GM all have higher chances of bankrupcy in the next two years than BMW has, and I doubt any of them will be facing bankruptcy in the next 2 years despite our current situation.

I'm not making anything up. Premium automakers can’t afford the luxury of current business model, analyst says
BMWs net profit last year was about 5 billion dollars. Their own guidance points to less than 3 billion NP for 2020. Debt is over 200 billion. They had 12 billion in cash at the end of 2019. How much cash will they burn each day during the coronavirus shutdown? But, they do have the backing of the ECB, so while they will be functionally bankrupt in 2 years, the ECB will not allow them to actually go bankrupt. They will just keep injecting cash to prop them up. And yes, not all ICE equipment is stranded asset class. But a lot of it is. Making engines, installing fuel tanks, transmissions, etc all no longer needed.

 

[Mo City]

I'm not making anything up. Premium automakers can’t afford the luxury of current business model, analyst says
BMWs net profit last year was about 5 billion dollars. Their own guidance points to less than 3 billion NP for 2020. Debt is over 200 billion. They had 12 billion in cash at the end of 2019. How much cash will they burn each day during the coronavirus shutdown? But, they do have the backing of the ECB, so while they will be functionally bankrupt in 2 years, the ECB will not allow them to actually go bankrupt. They will just keep injecting cash to prop them up. And yes, not all ICE equipment is stranded asset class. But a lot of it is. Making engines, installing fuel tanks, transmissions, etc all no longer needed.

I don't want to derail but answer me this: What is your prognosis for GM and Ford? Even worse than BMW.

 

[Swampgator]

I don't want to derail but answer me this: What is your prognosis for GM and Ford? Even worse than BMW.

GM poor. Ford poor also, but they may be helped by Rivian on the truck side. That is if they can get enough cells. GM is talking about doing there own cells. Not sure what Ford has planned. No cells, no Evs. No EVs=loss of market share. If they both lose market share on the truck side, they will be in trouble. Either makes any money selling cars. Ford decided to stop selling most cars over a year ago. Ford to stop selling every car in North America but the Mustang and Focus Active – TechCrunch

 

[Swampgator]

GM poor. Ford poor also, but they may be helped by Rivian on the truck side. That is if they can get enough cells. GM is talking about doing there own cells. Not sure what Ford has planned. No cells, no Evs. No EVs=loss of market share. If they both lose market share on the truck side, they will be in trouble. Either makes any money selling cars. Ford decided to stop selling most cars over a year ago. Ford to stop selling every car in North America but the Mustang and Focus Active – TechCrunch

GM to draw down $16 billion from revolving credit facilities, withdraws 2020 guidance

 

[Zorg]

The next few years will be interesting to witness, that's for sure.

 

[brkaus]

The next few years will be interesting to witness, that's for sure.

Bit now they have other Viral things to blame it on. While the real reasons are pushed to the back for a while.

 

[Jayson]

I'm not making anything up. Premium automakers can’t afford the luxury of current business model, analyst says
BMWs net profit last year was about 5 billion dollars. Their own guidance points to less than 3 billion NP for 2020. Debt is over 200 billion. They had 12 billion in cash at the end of 2019. How much cash will they burn each day during the coronavirus shutdown? But, they do have the backing of the ECB, so while they will be functionally bankrupt in 2 years, the ECB will not allow them to actually go bankrupt. They will just keep injecting cash to prop them up. And yes, not all ICE equipment is stranded asset class. But a lot of it is. Making engines, installing fuel tanks, transmissions, etc all no longer needed.

Good to see you finally admitted your prediction that BMW will be in bankruptcy in 2022 was wrong. BTW, where are you seeing they have 200 billion in debt?

 

[Kmartyn]

I think it will be many years still for most people do fully switch to EV, mostly due to misinformation or lack of knowledge on EV's. The other reason is a lot of people go from leasing one car to the next, so if you can't can delivery from Tesla for a model Y within a couple of weeks that will keep those people going back to the ICE of their choice.

Not sure about you but I've had my Model 3 for 18 months and even after telling people i work with about the range they still don't believe that they could manage it, even though they could pull off charging once a week with their commute and we have a Lvl2 20A charger at work, and each of them drive directly past a supercharger. They still think it would be easier to stop at a gas station, and they still seem surprised when you say you went to Niagara falls on the weekend(220km round trip) and ask where do you charge when you go there and seem confused when you say, i charged here at work before i left and i'll probably charge again tomorrow because i still have 40% range left after making that trip.

...and the Niagara Falls V3 SC should be open Very soon, if you want a quick top, up while there.

 

[Swampgator]

Good to see you finally admitted your prediction that BMW will be in bankruptcy in 2022 was wrong. BTW, where are you seeing they have 200 billion in debt?

Now you are just acting like a child. They will be bankrupt without getting bailouts from the EU and German governments. SO I am not chnging my prediction. And, the balance sheet is the best place to find information on liabilities. Here you go:

 

[realvvk]

You Y will drive like it is on rails compared to your X 3/5. They are both tippy when cornering at speed. EVs have all their weight low and are very planted in the corners. My X handles better in many corners than my 335 did.

Don't assume that MY will be planted like your MX. I love the way the MX drives, it would be my favorite Tesla if it did not have the idiotic doors and front windshield. In fact, when I was buying my MS, the MX was exactly the same price and would have been a MUCH better fit for my family. But alas, I cannot change the way the world works. When I test drove a SR+ Model 3 recently, I did not like the way it felt at all. It felt extremely scary at high speed on wet/cold pavement, very unstable on the same road where my MS felt like it was on rails driving in the same conditions. The steering was extremely heavy and nervous, even on its lightest setting. The ride was absolutely unacceptable, with a weird bucking motion and very rough. It was very, very noisy -- even at low speed where I could clearly hear the new pedestrian warning noise. On the highway the noise was at the level of a non-premium car or worse. I loved the interior and the seats, both front and back. It really fit me like a glove up front -- so much better than my MS, which has terrible seats in comparison. The seating position in the back was so much better than the MS! But compared to MS/MX the M3 is very, very different. Reading all the new reviews of Model Y that have been popping up, it sounds like MY handling, steering, interior noise and ride quality are substantially similar to Model 3 (or worse.) So don't assume you will like it compared to your BMWs and certainly to your MX. Both my Model S and all of my BMWs (still own a 550i) and Mercedes felt way, way better than the Model 3 in terms of steering (way steadier, better feel,) ride (WAY more buttoned down and stable,) interior noise (no comparison, M3 is extremely loud) and overall driving feel.

Before you say anything about the 18" Michelin Primacy MXM4s -- they are my favorite tires. I have been putting them on all my cars ever since they came out. So this comparison has tires constant -- all my cars are equipped with exactly the same Michelin Primacy MXM4s, as was the Model 3 I test drove.