1D·

German Automakers in a Bind

The German auto industry is faltering, and the first suppliers are buckling.

The heavy reliance on China—both in terms of sales and supply chains—has led German automakers into a strategic dead end. A workforce that has been pampered for decades is resisting structural changes that would come at their expense. Meanwhile, China is pushing its brands into the European market.

Does this spell the end of German engineering? Are the once “best cars in the world” coming to an end?

Amid all this turmoil, the P/E ratios of $MBG (-0,25%) and $BMW (+0,67%) at least still below 6 (by comparison $TSLA (+2,99%) at >300), and the Chinese automakers are themselves suffering under the conditions of their own market (profit decline $BYD 24/25 ~19%).

What do you think?

Can the prestigious German brands turn things around again, or is money better invested abroad? Or are you perhaps staying away from the industry altogether?

BYD

35,53%

BMW

18,16%

Mercedes Benz Group

16,05%

Toyota

14,21%

Tesla

16,05%

380 Votos

17 Comentários

FinanzKeks@ImmoHai

When it comes to valuation, I would always consider Tesla separately. $RACE, or more speculative $9868

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SomeRandomGuy@SomeRandomGuy

@ImmoHai Is it because Tesla doesn't have to deliver to keep its fans invested, or because we'll soon be zooming across Mars in flying robotaxis? 😁

What "convinces" you about Ferrari and Xpeng (or at least makes you look in that direction)? They are, after all, very different companies.

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Manuel@Garondt

I think German automakers will manage to turn things around, though perhaps only once they continue their transition to electric vehicles. The advantage of Tesla, Xpeng, and others is that they focus entirely on electric vehicles. As a result, they don’t need engineers for engine design and the like.

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SomeRandomGuy@SomeRandomGuy

@Garondt I’m also curious to see how the German premium automakers will position themselves. And whether Germany and the EU have the necessary will to support European manufacturing—including battery production—accordingly.

The perspective on engineers that you’re referring to is a very interesting point: “German engineering” is a German USP, and body manufacturing (looking at you, Tesla), door-closing and driving noises, safety, and driver-assistance systems, etc., are all “engineered.” It remains to be seen whether the brands will want to—and be able to—emphasize this once the internal combustion engine is no longer the core of the vehicle.

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Hendan@Hendan

I learnt at my expenses to stay away from automotive stocks. I owned $1211 for quite some time, and even though the potential there is great, I think there may be too many geopolitical, sectorial and regulatory issues with this industry

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SomeRandomGuy@SomeRandomGuy

@Hendan I agree it is politics-heavy and I understand why this pushes you away. To be honest, I regard my car stock shares as a rather speculative investment myself.

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Dukke@Dukke

$RACE

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SomeRandomGuy@SomeRandomGuy

@Dukke Do you own shares? What makes you like this stock?

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Dukke@Dukke

@SomeRandomGuy Yes. Highest profit margins, Ferrari's pricing power, gas-electric hybrid cars, Formula 1, waiting lists for purchases...

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KarlMags@jjjjjonas

BMW won’t go under despite the crisis, since it has both a large fan base and is the best-positioned company (innovation in electric vehicles, without completely phasing out internal combustion engines, and the largest auto plant in the U.S.). Besides, the dividend—which isn’t subject to withholding tax—makes even slumps in the stock price bearable.

In Europe, I also find Renault (unfortunately, I can’t link to it here) particularly interesting right now. Due to fuel prices, demand for electric cars in the low-price segment is rising, and Renault is best prepared for this.

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SomeRandomGuy@SomeRandomGuy

@jjjjjonas $BMW It also has an edge over other manufacturers thanks to more flexible production structures and more resilient supply chains.
But $MBG probably has the stronger international brand, right?

Renault $RNO

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Epi@Epi

Just as a general question: Why should anyone invest in stocks from a cyclical industry at all?

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SomeRandomGuy@SomeRandomGuy

@Epi That's a great question! Are cyclical stocks generally excluded from your momentum strategy?

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Epi@Epi

17H

@SomeRandomGuy My momentum strategy does not include individual stocks, including cyclical stocks.

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SomeRandomGuy@SomeRandomGuy

14H

@Epi Okay, bundled into indices, but I was also thinking about commodities and stocks. My point was more of a general one—whether cyclical stocks, in particular, might be of interest to you at times (i.e., when they have momentum). I’ve read some of your articles, but maybe I misunderstood something.

In any case, your opening question really got me thinking 😅—a sincere “thank you” for that!

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Chris@1Chrischi1

$RACE It's already going well.

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Daniel Kaufmann@Wollitz

12H

I myself work for a company that acts as a supplier to the major automakers. I see the near future (I can’t really give you a specific timeframe, but I’d say 1–2 years) as very, very difficult. I believe the sector will only regain momentum if the EU imposes drastic tariffs on electric cars from China (I think they’re already at 30%) and if we perhaps take a similar approach to the Chinese by forcing them into joint ventures. I recently watched a relatively interesting video (I can’t verify if everything in it is accurate) that clearly outlines the issues and tactics of Chinese automakers. The Chinese government is forcing companies to lease BYD vehicles only to park them in a car graveyard. After a certain period of time, these cars, for example, no longer count as new vehicles and are therefore exempt from EU tariffs. As far as I’m aware, the tariff applies only to new cars. At the same time, BYD declares these leases as new-car sales, which, of course, beautifully boosts its balance sheet. The companies that take on these cars, of course, gain nothing from this, and the government subsidizes these leases by pumping massive amounts of money into this sector to further boost their brands and sales figures on the European market (used cars). The goal is quite clearly to weaken and destroy European automakers. No car from Germany or France can possibly compete with these cheaply produced vehicles. I also believe that, through joint ventures—as is common practice in China—a great deal of technology has been stolen and/or skillfully copied. China has always been heavily involved in industrial espionage. What I’m writing here largely reflects my personal perception, and I could very well imagine that there’s a lot of truth to this video. As I said, I can’t verify it, and I don’t want anyone to think I’m just spouting nonsense here. Just think about it for yourself: could this actually be possible, or is it completely out of the question? Otherwise, I’d currently put my money on Toyota—I mean, the brand speaks for itself and always posts strong sales figures. Plus, the Japanese (in my opinion) build cars of very high quality. I drive a Subaru myself and am extremely happy with it. Best regards

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