There was a decline in the shares of BMW, Daimler and Volkswagen because of indications that the growth in the auto market in China, the world's biggest, could be slowing more than previously predicted, resulting to an increase in auto discounting. During a conference in Qingdao last Tuesday, Gu Xianghua, one of two deputies to the secretary general at CAAM, said that the China Association of Automobile Manufacturers predicted that total vehicle deliveries will grow by 8% but it failed to climb by even 5% due to the "difficult" economy.
Gu said that the demand for commercial automobiles would be among the worst affected.
As of 11:20 CET in Frankfurt trading, BMW shares had fallen by up to 3.89 euros, or 5.4%, to 67.95 euros. Daimler shares dropped by 5.1% to 44.71 euros and VW declined by 4.5% to 132.90 euros. Cheshi.com, which monitors prices at over 3,000 Chinese dealerships, said that Mercedes is offering record discounts of 25% on the S-class sedan in China.
The sticker prices of BMW's 7 series and Audi's A8 sedans are now lower by 20%. There are no more waiting lists and to attract sales, dealerships have been offering perks like free iPhones or Hermes-bag coupons.
VW considers China to be its biggest market. For BMW and Mercedes, it’s the third-biggest in China. Daniel Schwarz, a Frankfurt-based analyst with Commerzbank, said that the rebates are indicative of a weaker demand in China. Schwarz added that German automakers “certainly” look at it as a negative.
In his estimate, China makes up around 30% of profit at BMW and VW and approximately 20% at Daimler. The Chinese economy has been slowing down and the fuel is getting more expensive, resulting to more pessimism as these factors are expected to drive away consumers from dealerships.