BMW share price has been in a strong sell-off this year, erasing billions of euros in value, as concerns about its growth continue. After soaring to €92.52 in December, the stock has slipped to €55.86. This retreat has pushed its market capitalization from €57.6 billion to €33 billion.
BMW stock has dropped amid growth concerns
The ongoing BMW stock retreat has coincided with that of other German automakers. Volkswagen has tumbled to its lowest level in decades, with the management announcing major layoffs. Porsche and Mercedes-Benz have also been in a steep sell-off this year.
BMW is facing several major challenges. President Donald Trump’s tariffs have affected its American business, which accounts for a substantial share of its total revenue.
Its electric vehicle investments have largely flopped. Most importantly, the company’s Chinese business is struggling as competition from domestic manufacturers like XPeng, Nio, BYD, and Li Auto gains market share.
The most recent results showed that BMW’s sales to Chinese clients dropped by 30.2% in the second quarter to 117,927. These sales dropped by over 20% in the first half of the year. The weakness was offset by a 7.6% increase in Europe and 9.4% in the Americas.
In total, BMW’s deliveries dropped by 5% in the second quarter to 590,947, with its revenue falling by 7.7% to €27.16 billion. This retreat helped to drag its profitability substantially down, with EBIT falling by 60% to €629 million.
According to Bloomberg, the company is seeking to restore margins by simplifying its business, cutting costs, and selling more premium vehicles. It hopes that these events will help to boost its auto margins to between 3% and 5% by 2028. If it achieves this, its goal is to get to between 8% and 10% early next decade.
It will not be easy to get there, considering that it is facing substantial headwinds in China, where it has had a substantial market share for decades. In a recent statement, BYD’s management said that China’s business was facing major challenges, including rising competition, costs, and price war.
The only positive thing about BMW is its significantly low valuation multiples. It has a trailing price-to-earnings ratio of 5.14, much lower than the manufacturing median of 17.4. This cheap valuation, however, may be a value trap because of its substantial challenges.
BMW share price technical analysis
BMW stock chart | Source: TradingView
The daily chart shows that BMW stock has slipped in the past few months, moving from a high of €92.52 in December to a low of €52.42 this week. It made a down-gap in June and has remained inside a narrow range since then.
The stock then made a bearish breakout below the lower side of the channel this week and is about to retest it. It also remains below all moving averages and the Supertrend indicator.
Therefore, the path of the least resistance for the stock is downwards, potentially to the psychological level of €50.
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