BMW, Daim­ler, Volk­swa­gen lead auto stocks’ drop

The Pak Banker - - Company& -

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.

PSA Peu­geot

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

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