BMW AG

The stable outlook reflects our view that BMW will continue to expand its competitive EV line to build its EV market share under its main brand such that it is equal to or higher than its current passenger car market share across its key regional markets. Supported by ongoing cost-efficiency measures, we forecast that the group will be able to maintain adjusted EBITDA margins above 14% and sustain adjusted FOCF to sales at least at 4%. We could lower the rating if more intense competition in one of BMW's key regional markets in Europe, China, or the U.S. weakened its market shares in key segments, including for EVs, or resulted in pressure to step up investments to keep pace with

...Industry component shortages are set to constrain BMW's car production in 2022. BMW's car production recovered strongly in the first half of 2021 to levels similar to those before the COVID-19 pandemic in 2019. Thereafter, third-quarter 2021 production dropped by about 15% year on year, and was about 15% lower than in the third quarter of 2019, mainly reflecting the impact of ongoing supply shortages for automotive semiconductors. With vehicle inventory already very low, we think the bottlenecks will weigh increasingly on the group's wholesale and retail sales volumes in the final quarter of 2021 and the first half of 2022, before gradually easing from the second half of next year. That said, we estimate that BMW is somewhat less affected by the chip shortages than its peers. Based on data from LMC Automotive, the moving last-12-month production rate as of the third quarter 2021 was about 98% of the 2019 level for BMW, compared with 90% for the overall industry and about 88% for Mercedes-Benz...

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