Research Update: Automaker BMW Downgraded To 'A' On Weaker Cash Flow And Revenue Prospects Due To COVID-19; Outlook Negative

The effects of the COVID-19 pandemic will likely result in lower-than-expected unit sales for BMW AG, and that production cuts will hurt the group's revenue and cash flow in 2020. Moreover, we expect that BMW's suspension of all European and South African production facilities for four weeks, intensified cost-savings initiatives, and focus on cash preservation won't be sufficient to fully offset the impact on its earnings. We expect production to resume early in the second quarter of 2020 in Europe and the U.S., but any delay could further pressure the group's credit metrics and liquidity. In our view, BMW's available liquidity sources offer headroom to cope with a production standstill of at least three months, even absent additional measures or

...- The effects of the COVID-19 pandemic will likely result in lower-than-expected unit sales for BMW AG, and that production cuts will hurt the group's revenue and cash flow in 2020. - Moreover, we expect that BMW's suspension of all European and South African production facilities for four weeks, intensified cost-savings initiatives, and focus on cash preservation won't be sufficient to fully offset the impact on its earnings. - We expect production to resume early in the second quarter of 2020 in Europe and the U.S., but any delay could further pressure the group's credit metrics and liquidity. In our view, BMW's available liquidity sources offer headroom to cope with a production standstill of at least three months, even absent additional measures or government support. - We are lowering our long-term ratings on BMW and its senior unsecured debt to 'A' from 'A+' and affirming our 'A-1' short-term ratings. - The negative outlook reflects the high degree of uncertainty regarding the economic...

Research Update