BMW, Daimler, Volkswagen lead auto stocks’ drop
BEIJING: Bayerische Motoren Werke AG, Daimler AG and Volkswagen AG led a decline in European automakers' stocks after Beijing's city government decided to limit the number of new passenger cars to ease road congestion, Bloomberg reported.
BMW, the world's leader in luxury-car making, slumped as much as 5.8 percent in Frankfurt trading, the steepest intraday decline since May 19. Daimler fell as much as 5.1 percent, the biggest drop since July 27. Preferred shares of Volkswagen, Europe's largest carmaker, dropped as much as 5.7 percent.
Beijing, ranked as having the world's worst traffic con- gestion, will issue a quota of 240,000 new vehicle license plates through a lottery system next year, with about 88 percent allocated to individual buyers, according to a Dec. 23 statement. The quota is onethird of the number of new passenger cars registered this year, said Shin Chung Kwan, an analyst at KB Investment & Securities Co.
"It remains to be seen to what extent traffic limitations are eventually realized but it's possible that Beijing may only be the beginning," said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler who recommends buying VW, Daimler and BMW shares. "There's no doubt that this announcement is creating a considerable element of uncertainty." BMW was down 5.3 percent at 59.89 euros as of 4:04 p.m. Daimler, whose Mercedes-Benz division ranks second among luxury brands after BMW, fell 4.4 percent to 51.68 euros. VW declined 4.8 percent to 122 euros.
Volkswagen, counting China as its biggest market, said last month that its two joint ventures in the country will spend 10.6 billion euros ($13.9 billion) in the world's biggest auto market through 2015, adding two factories to help double production to 3 million cars a year. VW has nine Chinese plants and its 11month sales in the country, including Audi, Skoda and VW brands, surged 38 percent from a year earlier to 1.82 million vehicles.
Volkswagen's global spending plans in the next five years total 51.6 billion euros, including 11.6 billion euros for Audi, outlined by division Chief Financial Officer Axel Strotbek on Dec. 13 and reiterated by the unit today.
Mercedes-Benz delivered 130,100 vehicles in China between January and November, a surge of 119 percent, to beat the company's full-year target of more than 120,000 deliveries. The Stuttgart, Germany-based carmaker's sales-growth rate in China has doubled this year to make the Asian nation Mercedes-Benz's third-largest market after Germany and the U.S.
BMW will add smaller models at its Chinese factories, which will have capacity to build as many as 300,000 vehicles annually by 2013, more than triple the Munich-based company's sales in the country last year. BMW's Chinese sales more than doubled last month to 17,302 vehicles.
"China still is, and has for some time, been the main cause for German carmakers' booming business," Pieper said. "Should some of this momentum now really be capped, then this would surely ring an alarm bell."
The steps planned by Beijing authorities pose "no reason for concern," said Konstanze Carreras, a BMW spokeswoman, adding that the manufacturer will monitor any further debate. "What matters is how the plans will be translated into practice."
Verena Mueller, a Mercedes-Benz spokeswoman, said by phone that it's too soon to gauge the effects of Beijing's planned measures. The company is sticking by its estimates of double-digit sales growth in the Chinese premium-car market next year, she said. Michael Brendel, a VW spokesman, couldn't immediately be reached.
Citroen, Europe's second-largest carmaker, fell as much as 3.5 percent to 28.41 euros in and was down 2.3 percent in Paris trading. Renault, France's No. 2 carmaker after Peugeot Citroen, declined as much as 2.1 percent to 42.80 euros and was down 0.6 percent.
Carmakers are also bracing for the expiration at the end of this year of Chinese government stimulus measures, including a consumption-tax rebate for smaller vehicles, subsidies for rural car-buyers and incentives to trade in older models. China's auto-industry lobby said Dec. 9 that the incentives are unlikely to be extended beyond 2010.
Moreover, Tesla Motors Inc., the unprofitable electriccar maker, fell the most since July after insiders were allowed to sell shares in the company.
Tesla shares fell $4.54, or 15 percent, to $25.55 at the close of Nasdaq Stock Market trading for the steepest drop since July 6. Capstone Investments Inc. initiated coverage Dec. 23 with a "sell" rating on the expectation that plug-ins and other hybrids will continue to outsell pure electric cars such as Tesla's.
The end of the lock-up period on Dec. 25 allows Tesla's early investors to sell for the first time since the company's June 28 initial public offering. -Bloomberg