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BMW-Porsche-Mustang-Nut
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One of my friends who works for UBS Warburg gave me a copy of a September 2002 report on BMW.

The preface says "Undemanding valuation metrics coupled with our expectation for sales growth, increasing outsourcing and free cash generation make BMW a compelling investment in the current economic climate"

They bump BMW AG up to a 'strong buy' Naturally, they acknowledge the significant shareholding of the Quandt family.

Here's a few bits:

Conventional wisdom would suggest that to invest in a premium vehicle manufacturer against that backdrop of econcomic uncertainty would be risky. In the case of BMW, however, we would disagree. In our view there are five key reasons why a postive stance on BMW shares makes sense, and why we raise our rating.

(1) Product & Growth: Expect 30% in next 5 years. (2) Mix: Consumers continue to upgrade and order options. 50% of group profitability is derived therefrom. (3) Outsourcing: Build-to-order, and complete outsourcing of processes ---- such as the entire X3 assembly process to be handled by Magna. (4) Reducing risk: Build-to-order is increasing agility, reducing procurement inefficiency. (5) Markets: Premium market has grown at twice the rate of overall market, and will continue to outperform.

They conclude that BMW AG stock is worth ~50 euro.

The rest of the report is 60+ pages of product line by product line, group by group analysis. Admittedly, the pictures of the upcoming cars (prototypes) worry me --- with whatever one wants to call the design direction.

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Now, here's Aus' Marketing Report in one paragraph:

From where I sit, I believe BMW is taking a big risk in alienating all the longtime supporters. As good as their marketing campaigns are ---- more of their cars have been sold because engineers, father-figures, trackies, CCA members, auto-mag editors and others (who people listen to when consider buying cars) ----- tell people why Bimmers have provided better overall value and performance for the money. To the extent that BMW moves away from form-follows-function and gets caught up pushing style over substance they'll lose this group . . . and in time . . . and it will take time . . . they could lose dramatically. Bandwaggons take time to pick up as well as drop off. I'm hoping the focus gets placed squarely back on the core values of the company: Superior Engines and Engineering.

Off the soapbox now,

Ausgang (6 time Bimmer owner since '83)
 

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Ausgang said:
Now, here's Aus' Marketing Report in one paragraph:

From where I sit, I believe BMW is taking a big risk in alienating all the longtime supporters. As good as their marketing campaigns are ---- more of their cars have been sold because engineers, father-figures, trackies, CCA members, auto-mag editors and others (who people listen to when consider buying cars) ----- tell people why Bimmers have provided better overall value and performance for the money. To the extent that BMW moves away from form-follows-function and gets caught up pushing style over substance they'll lose this group . . . and in time . . . and it will take time . . . they could lose dramatically. Bandwaggons take time to pick up as well as drop off. I'm hoping the focus gets placed squarely back on the core values of the company: Superior Engines and Engineering.

Off the soapbox now,

Ausgang (6 time Bimmer owner since '83)
Well stated, Aus! :thumbup:
 

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lurking
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bmw has a great deal of brand equity gained from their performance back in the late 80's with the e30m3.
 

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Huh?

Your rant and the USB Warburg report don't seem to be related.

They seem to be saying that the high-end car market is growing faster than the rest of the market, BMW is increasing manufacturing efficiency, and BMW's customers tend to load up on options keeping margins high. What's not to like?

Personally, I *want* BMW to stay in business because I love their cars. If that means they build random and somewhat silly SUVs like the X5 and X3 (that handle great for SUVs), that's fine if it makes them money. And to be fair, if I had to buy an SUV, I'd take a long hard look at the X5. It really does drive well for an SUV. But as long as keep building the cars *I* love (selfish me that I am), (3's and M3), I'm happy.

- Ray
 
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