The big carmaker comparison: fundamental analysis on the industry of $BMW
, $MBG
and $VOW
Hello all,
as mentioned last time, today comes the second part of the big carmaker comparison around BMW, Mercedes and consorts. For the fans of disruptive markets around tobacco and vaping I recommend my BAT update:
If you haven't read the first part to this series, you can find it here:
https://app.getquin.com/activity/UEHswBRfLa?lang=de&utm_source=sharing
The disclaimer is also important:
Disclaimer: This is not investment advice. It is also not an invitation to buy / sell financial products. I only describe my opinion here. You have your own responsibility towards your investments. So I also assume no liability.
For your orientation we are now in part 2 of the table of contents:
Mercedes in China
- Part 1
- Importance of China for the automotive industry
Part 2 (You are here)
- Fundamental analysis of Mercedes & co.
Part 3
- BYD vs. Mercedes (optional)
Part 2: Fundamental analysis of Mercedes
In the last part, I suggested the fundamental analysis of Mercedes and closed by saying that I would like to tell you why Mercedes and co. are not too happy with the e-boom in China.
I'll give you three nice numbers: 0.8, 0.3 and 0.1.
What is it about these numbers? Is it increasing per mille values to be able to bear the following numbers?
No - these beautiful numbers are the market share of BMW, Mercedes and Audi in China.
For hydrogen?
Worse - for e-mobility. Yes, you read that right - our German automotive art is being properly ignored in China. Afterwards also not respected. Then forgotten.
Yes, but they are under construction and can't do anything about it, you're just an e-fanboy.
Apart from my ambivalent relationship to e-mobility, I can also break down this argument with another number: 25 and 2.4 :)
Is that BMW's targeted number for 2030 of e-cars sold in China plus per thousand to drink it up?
No - it's Volkswagen's current market share of 2.4%. What's funny about this is that rather little here is in the start-up phase. There are already 25 factories in China producing exclusively for the Volkswagen Group. Nevertheless, VW is not getting anywhere here either. In addition, another funny numerical context: China is more or less the Mecca for e-fanboys. In 2022, the share of e-vehicles in China could increase by 90%. Specifically, we are talking about 5.7 million vehicles (see (1), (2); (3)).
I'll be extra fair now - how many cars did ALL German automakers together sell out of that 5.7 million? 1.5 million? 1 million?
It doesn't get any better: NOT EVEN 500,000 vehicles were sold by ALL German automakers TOGETHER in China of e-vehicles. It was just:
200,000 (!) in words: Two hundred thousand vehicles from Germany for China :)
This number seems big, but it accounts for just 3.51% of 5.7 million cars. Yes, that's right - the parent companies of the legendary BMW 3-series, AUDI S4 or even the Mercedes S-class together don't even manage more than 5% market share in one of the most booming e-markets. An absolutely devastating conclusion (see ibid.).
To really escalate now - a question for Audi fans: Of the relatively popular AUDI E-Tron GT RS - how many vehicles has Audi been able to sell in ALL of China?
- 50.000
- 30.000
- 10.000
Decision made?
Every one of you who responded to one of these suggestions is an incorrigible optimist. Because the true number is *drum roll*.
..
43 :)
Yes :)
WHOLE THREE AND FOURTY cars of a popular series of the VW Group :)
Isn't that glorious? For the feeling: In Germany, the Audi e-tron was 25,794 cars.
- in 2021
- in the first half of the year
Interesting, then, that German automakers achieved growth rates in the construction of battery electric vehicles (abbreviated: BEV) in Germany of a maximum of 259.7% from 2020 to 2021, and VW even planned to sell a whole million e-cars in 2021 (see (4)). The headlines like this one from (5) are the real scandal:
"Audi e-tron GT: The electric car BMW has no answer for".
BMW doesn't even need to give the answer. In my opinion, BMW and VW are living in a dream world here and are expanding their positions of power in the German region to the Asian region, thus suffering crash landing after crash landing after crash landing.
What is the reason for this?
It's relatively simple and can be shown with a simple example: The Mercedes EQS did not run well and had to be reduced. Okay can happen. What should happen less are price reductions of up to 30,000 euros. These were necessary in order to keep this vehicle competitive on the market. So while German manufacturers have to offer their cars cheaper, the domestic competition is subsidized. This does not only apply to China - the U.S. also follows this path. Nevertheless, Tesla, for example, managed to become one of the most popular brands in the Middle Kingdom (see (4), (5); (6)). How did the German automakers fare?
If we then assume the sales volume of Mercedes and co in China to be about one third, the problem becomes apparent:
- No subsidy abroad (logical)
- Competition is getting more and more innovative (less logical)
- Market grows by 15% from January 22 - September 22, German carmakers lose massively (illogical)
Specifically, VW lost 3.4% market share in this all-important period and Mercedes also fell 0.7%. BMW was no less badly off with a 1.1% loss in market share. So a growth from 2.734 to 5.03 million vehicles in the Middle Kingdom is met with market share loss. This points to existential problems (see (6), (7)).
How does this fit in with the described expansions of the factories from the first part?
BMW and co together sell 20% of new registrations of Chinese combustion cars. This is initially positive, and that is why many new factories are being built in China. Also the mentioned expansion of the factory from the first part is mostly due to the dependence of the German carmakers to the combustion market in China. Is it starting to ring a bell? China's booming electric market with a growth rate of
5.03 million / 2.734 million = 1.84 times in one year
Reduces the Chinese combustion market more and more. Now the problem: Audi, BMW and co. are "made in Germany" and very well recognized for their (combustion) cars. But what are they not?
Renowned for their electric drives. Consequently, this leads to the problems described - the competition like Hongguang or BYD are so popular with the Chinese voice assistants, on-board entertainment and other equipment at a high level. It is virtually considered standard. Unfortunately, this is not the case for BMW, Mercedes and co. Source (10) shows that without the luxury and "Made-in-Germany" badge, German automakers are pure and expensive mediocrity (see (8), (9), (10)).
I would like to close this section by quoting Prof. Dr. Dudenhöffer on the question of what will happen to German automakers when the Chinese market collapses:
"Then you can throw them away". - Prof. Dr. Dudenhöffer (10)
Did you like this part? How do you see the electric turnaround of German automakers in China?
Feel free to let me know in the comments!
Your Bass-T
Sources
(3) https://insideevs.de/news/560064/audi-elektroauto-verkaufszahlen-2021-plane2022/
(4) https://www.meinauto.de/news/vw-verkauf-von-e-autos-zieht-kraftig-an
(8) https://www.electrive.net/2022/06/23/bmw-eroeffnet-weiteres-china-werk-in-shenyang/
