Luxury Lounge

bristol2

We should not forget that BMW is only a true luxury brand in the USA. In Europe you can get the 1-series, stripper versions etc.

The last time I was in England I was amazed at all the (affordable) BMWs that were around but they all had cloth seats, manuals and wind up windows.

I do agree that these brands may not have the product range to approach Ford, GM and Toyota in sales volumes but I do not think that adversely impacts their viability.

That's like saying Casio will put Rolex out of business. Different scales of production work for different scales of sales.

Mind you, if BMW ever mess up the 3-series things could be rough for them.

volvomax

Even with the 1 Series, BMW doesn't have the product range of Toyota or Ford.
I never said BMW would be put out of business, only that they are vulnerable to market fluctuations, more so than a bigger car co.
Remember what happened to BMW in the early 90's?

dewey

The BMW comment is very telling. No matter how you slice it in the long run a lux maker without a broader universe of everyday cars to sell is not going to hold on or stay profitable/cash positive if it does; not with the future huge investment requirements and the need to spread those investments costs among many millions of cars sold annually in what will be a very rough competitive market. Pure ROI story.

MB believed during 98 that a lux maker cannot survive without selling everyday cars. That kind of toxic thinking is what lead to the current demise of Daimler Chrysler(selling Chryslers and SMARTs at a hefty loss). And YES a lux maker can thrive without being big . BMW used a GM auto tranny for the 5 series and European Chrysler engines for its first generation MINI . Huge investments are not required in this day and age of automotive outsourcing. BMW’s use of outsourcing ( for developments that are too expensive to develop in-house) is what makes BMW a high ROI story. BMWs joint hybrid endeavors with other auto marques is another example of how BMW can remain small and independent and at the same time pursue expensive drivetrain technologies.

dewey

Remember what happened to BMW in the early 90's?

No I dont remember? BMW was thriving during the late 80s and early 90s. But I do remember the problems Porsche had during the early 90s.

530ir1150r

I think BMW needs to remember what happened to Packard and Duesenburg (?) in the thirties. Packard increased volume by reducing costs and standards. Duesenburg increased volume by acquiring (or being acquired by)lower priced models (Auburn and Cord). Both went out of business.

dewey

According to the Wall Street Journal it appears affluent bankers are spending more money on their mistresses than their luxury cars. :confuse:

Wall Street bankers say they're spending about 12% of their money on fine art and collectibles, while 14% went toward "other" -- a category that includes hobbies such as horses and flying lessons, as well as "mistresses."

Despite media reports of bankers rushing to Ferrari dealerships, the survey showed they spent a relatively small 3% of their bonuses on luxury cars. (That's still $149,000 each, based on the average payout.)

Wall Street Journal

anthonyp

Hi Dewey

I can certainly imagine the other Lady to be very expensive, in fact my wife is expensive--to say the least--A Ferrari could be parked in a pinch, but not the mistress, as she would be gone `In a Flash`, maybe in the Ferrari ...Tony

volvomax

No I dont remember? BMW was thriving during the late 80s and early 90s. But I do remember the problems Porsche had during the early 90s.

BMW was NOT thriving.
Ask anyone who was with them in the late 80's to early 90's.

volvomax

Duesenberg didn't go out of business because of Auburn.
People simply wouldn't or couldn't afford their product in a Depression.
Remember the Duesnberg 20 Grand?
Thats how much it cost in 1933.
A Ford was what, $600?
Even a Rolls wasn't near that much.

volvomax

Daimler was big before the merger w/ Chrysler.
Remember, Mercedes was only a part of Daimler-Benz.
The merger never made sense to me, or anyone else. DBAG didn't need Chrysler. Chrysler needed DBAG.

BMW thrives only so long as people will pay inflated prices for their bread and butter products.
BMW's profitability is what allows it to remain independent and pursue new models.
Without the huge profits from the relatively few cars they sell, they would be up a creek.

dewey

Wow! The average transaction price of a 07 S Class is almost $100K. More than 36 percent higher in terms of transaction costs than a LS! Amazingly the S Class is selling very well and is among the hottest models today based on dealership inventory turnover figures.

This proves that the wide price gap between the MB S Class and Lexus LS remains today as it did in the past.

SOURCE: WALL STREET JOURNAL

dewey

Ferrari could be parked in a pinch, but not the mistress, as she would be gone `In a Flash`, maybe in the Ferrari

That would definitely be the best case scenario! Otherwise if the banker's wife finds out he will end up spending more than 3 percent of his income on alimony, child support and sharp elbowed lawyers.

In that case a ex-mistress driving off in the oppostite direction with his Ferarri would not be so tragic after all.

dewey

BMW was NOT thriving.
Ask anyone who was with them in the late 80's to early 90's.

OK instead of me asking anyone I will ask you: "What makes you think BMW was in serious trouble during the early 90s? Size for BMW is not a disadvantage. Even the soon-to be biggest car maker Toyota sends their engineers to BMW factories so that they can learn a thing or two. Here is a blurb from Businessweek:

That's no small accomplishment, and it has fueled BMW's growth over the past decade from a boutique European automaker to a global leader in premium cars. Although BMW, with $59.2 billion in sales last year, is much smaller than its American rivals, the U.S. auto giants could still learn a thing or two from the Bavarians. Detroit's rigid and bloated bureaucracies are slow to respond to competitive threats and market trends, while BMW's management structure is flat, flexible, entrepreneurial -- and fast. That explains why, at the very moment GM and Ford appear to be in free fall, BMW is more robust than ever. The company has become the industry benchmark for high-performance premium cars, customized production, and savvy brand management, making it the envy of Mercedes-Benz (DCX ), Audi, and Lexus and the subject of Harvard Business School case studies. Even mighty Toyota Motor Corp. (TM ) regularly dispatches engineers to BMW's factories to see how the company cranks out 1.3 million customized cars a year.

That kind of individualization would swamp most automakers with budget-busting complexity. But BMW has emerged as a sort of anti-Toyota. One excels in simplifying automaking. The other excels in mastering complexity and tailoring cars to customers' tastes. That's what differentiates BMW from Lexus and the rest of the premium pack. "BMW drivers never change to other brands," says Yoichi Tomihara, president of Toyota Deutschland, who concedes that Toyota lags behind BMW in the sort of customization that creates emotional appeal.

link title

dewey

It is amazing that the hopeless description below on the Masserati factory in Modena ten years ago is the same factory today that produces the latest Quattroporte :

A decade or so ago I was poking around in Maserati’s factory in Modena, northern Italy, thinking it could have made the black hole of Calcutta look appealing.

There had been virtually no investment for donkeys’ years and the detritus of ages was piled up. The plant was clapped out and the organisation chaotic. The inevitable result of all this was outdated cars of a build quality that could charitably be described as well-intentioned and dismal sales.

The nadir was 1998, when just 518 Maseratis of all types were bought and losses were piling up ominously. The future of what was once one of Italy’s proudest sporting and racing car marques looked bleaker than a Yorkshire moor in winter. Then along came Fiat with a barrowload of cash and control of Maserati’s destiny was placed in the hands of Ferrari, the jewel in the Fiat group’s crown.

SOURCE: FINANCIAL TIMES

ljflx

Well that all sounds good Dewey but how come BMW can't move the needle on profitability. Profit before tax in 2001 is 3.24bln. Profit before tax in 2005 is 3.28bln and there isn't much change in between except for a year where they got a 300mln favorable bounce because of a one-time pension adjustment. Profit up 40mln on 218K more BMW unit sales and 158K more Mini unit sales. Incremental profit per car which s/b high in a well run business is zilch. It means they are giving the cars away. Now operating cash flow is up 1.8bln but it all disappears at the pofit before tax line as they have high investment costs eating away at half of that op cash flow with higher depreciation expense since 2001 and at some point that high investment is going to eat away another 1bln+ as there's still a difference of that much between their average 5 year capex investments and their depreciation in 2005. The question is where is the other $900mln of that 1.8bln op cash flow growth disappearing. How about annual lease write-off costs. P&L's at BMW are hardly exciting. Just click on financial reports and annual report for 2005 and then BMW group in figures and you'll see the 5 year results.

http://www.bmwgroup.com/bmwgroup_prod/e/nav/index.html?http://www.bmwgroup.com/b- - - - - - - - mwgroup_prod/e/0_0_www_bmwgroup_com/investor_relations/finanzberichte/geschaefts- - - - - - - - berichte/2005/zahlen/bericht_des_aufsichtsrats.shtml

designman

OK instead of me asking anyone I will ask you: "What makes you think BMW was in serious trouble during the early 90s?

Maybe he's referring to when they had the Rover Group from 94-00. That lost money.

designman

My belief is that the technology development costs in a fuel changing world in the future are going to be huge. If you don't have a large base of cars sold annually to spread them around to you'll be in trouble.

You seem to be implying that only the giants will survive. Don’t forget, Toyota has about a 14% market share. There are reasons why the other 86% don’t want Toyota products. Furthermore hybrids are inherently more expensive and this subverts everything we know about the goal of providing and attaining more for less. Right now hybrids are nothing more than a small niche market, and this market appears to be becoming saturated. Toyota’s profit margins are slim on this product. They are only operating this way to whet an appetite. This appetite is born out of necessity and the necessity right now is not overwhelming. The benefits of hybrids vs cost do not impress the buyer and this is pretty much documented. Hybrids aren’t rocket science, they are just more complex and costlier to produce. If the necessity arises the others in the industry will get on the bandwagon even if Toyota has a jump. They already have. I think there is one thing you are leaving out of the equation: a fuel changeover is not happening overnight. Didn’t we have statement from Lexus a year or two years ago that by 2008 or so all Lexuses would be hybrids? Well that’s not happening.

The reason I link the enthusiast in is that many of those folks want car companies to stay pure (witness already the Porsche backlash) and IMO in the future that will not be possible.

It’s ironic how Porsche is annoying the enthusiast and at the same time enjoying success as they have never known. As a matter of fact, if you look at them over the past 10 years it seems as if their success is directly proportional to how much they annoy the enthusiast. Are you suggesting that if companies like BMW and Porsche don’t stay “pure”, they will jump to Toyotas? Maybe I am reading you wrong but I see you predicting gloom and doom again.

This isn't about the cars it's about the business itself.

It’s always about the business and the business is about the cars. Let’s not trivialize the significance of the products and what they mean to the clientele. You have to realize that as good as Toyota is, and as strong as they are, there are plenty of people who just don’t want their cars. Lots.

ljflx

Dman - your missing the point I'm making. When heavy investment is needed to transcend a business - it consolidates. It's a natural occurence in business, any business. I'm not saying anyone is going to fail. I'm saying that consolidation is inevitable and consolidation happens from the top down. It's not going to happen in the next few years but in the LT it's inevitable. As for Toyota - they don't need to consolidate anything that's out there now, and likely they will look for acquisition pieces in countries that develop - like China. It's others that will need to consolidate in the future to match their breadth of market position.

"It’s ironic how Porsche is annoying the enthusiast and at the same time enjoying success as they have never known."

My point exactly. We are both saying the same thing. In order to do very well in the future you are going to have to annoy the hell out of the enthusiast. If you don't do that you will either fail or be locked into a tiny niche part of the industry. Porsche is reacting early and being very smart about it's LT future.

dewey

Good analysis Ljflx and you raise a good point: Why cant BMW raise their profit levels from 01 to 05? There are two reasons for this.

1) Those profit figures are in Euros. Euros have increased 30 percent between 01 to 05 against the US$ and major Asian currencies. Definitely this foreign exchange affect will have an adverse affect on BMW's bottom lines.

2)Profit figures reported by German companies are very different from profit figures reported by US Corporations. US Corps have two sets of books. One for the Tax Authorities and the other one for GAAP financial reporting purposes. In Germany there is only one book for both Tax and Corporate purposes. Evaluating German profit performance is misleading since management will have an incentive to minimize profits in order to minimize tax payments.

Free Cash Flows (Cash flows from operating activities Minus CapEx) are a far better indicator of BMW performance than profits. By the way FCF for 01 and 05 are identical at 2.4 Blln Euros. But then again looking at the individual years of 01 and 05 is not that helpful since Free Cash Flows for most companies tends to fluctuate all over the place each year.

The fact that BMW was able to maintain its profits and free cash flows despite the strengthening Euro is in itself quite admirable. Toyota has an advantage. The Yen is dropping even faster against the Euro than the US $. And Toyota has many plants in the USA to hedge against foreign exchange risk.

3) Those 05 figures are a bit outdated. I guess we will have to wait for 06 BMW Annual Reports to reach a conclusion that is more updated.

dewey

Right now hybrids are nothing more than a small niche market, and this market appears to be becoming saturated. Toyota’s profit margins are slim on this product. They are only operating this way to whet an appetite. This appetite is born out of necessity and the necessity right now is not overwhelming. The benefits of hybrids vs cost do not impress the buyer and this is pretty much documented. Hybrids aren’t rocket science, they are just more complex and costlier to produce.

Cheaper and lighter lithium ion batteries is what is going to make Toyota cash in on hybrids. There are rumors that the next Prius will have a lithium ion battery. This will boost gas mileage and make hybrids a great choice based on what a buyer can save on gas (in addition to its environmental benefits).

No car company can touch Toyota in terms of hybrid technology. Note the nasty recall on the newest Honda Civic hybrids. It is amazing that Toyota can introduce hybrids without any recalls or reliability issues.

ljflx

That's an annual report Dewey. Those are accrual figures not tax figures. Notice the difference also between units produced and units shipped. No one publishes tax return figures for public consumption and all corps in the US and Europe have their sched M (or whatever Germany's sched is) between GAAP (Euro GAAP) basis and tax basis. The only ones that care about tax based financials are the tax guys. I know the drill well as I worked for a European company.

dewey

You are correct most European countries have two different figures for public and taxman consumption.

But it is different in Germany. The figures in German Annual Reports include hidden reserves that are sometimes equal to 100 percent of fixed assets (in order to minimize taxes and to smooth reported earnings).

German reports to stockholders have to be identical to those produced to German tax authorities and that is why their reported earning are not comparable to a US company.

Things may change in Germany with the potential merging of IASB and FASB standards?

ljflx

Well even if that's the case you still have apples to apples non-growth over 5 years. Depreciation has another billion to come up and I'll bet you a lot of money you have substantial lease residual write-offs in those figures, which would be below the EBITDA/Op cash flow line even in EURO-GAAP. But once it gets repetitive then auditors would force it thru as a rev adjustment in current year revenue.

dewey

BMW's profit margins have also been held back by their introductions of lower margin models like the MINI, 1 series and X3.

The future margins of BMW will be driven by higher margin models that are currently in the development pipeline: X6, a BMW MiniVan , 4 new and more expensive variations of the Mini (there are rumors of a Mini SUV and a MINI Pick-UP truck), a higher luxury model than the current 7 series and last but not least a a much improved new generation 7 series (China is the number two market for the 7 series and sales growth there is nothing short of amazing).

BUT having said that the EURO is the main reason for BMW's not so impressive financial performance between 01 to 05. If the EURO fell like the Yen did these past few years then BMW's financial performance would most likely be far better than Toyota's performance. (in terms of margin growth).

volvomax

BMW in the late 80's was getting killed my M-B.
Early 90's had Lexus and Infiniti come along which hurt both the German companies.
Add in quality control issues, esp in new models.
Virtually every 95 7 Series had a new engine installed for example.
It wasn't until 97 w/ the launch of the new 5 that BMW began to make a comeback.

tagman

for the link. I'll add this forum to my favorites list and see how it goes once in a while.

TagMan

dewey

Welcome Tagman,

anyways here's news on what James Bond will soon be driving :

Just the other day I saw something that caught my eye – the new Audi TT – a car I’ve followed eagerly in the press. But seeing it in the flesh was much more impressive.

I noticed its number plates – ‘007’ – and I got talking to the driver. He told me that he was looking after the car ahead of filming an Audi commercial the following day.

http://ecommercenerd.net/2007/02/james-bond-007-audi-tt.html

dewey

BMW was catching up to MB during the 80s
Lexus was a threat to MB but not to BMW in the early 90s
Infiniti was never a threat to anyone except itself (those Zen-like Ads really bombed).

BMW's biggest mistake was ROver. Other than that BMW's comeback dates back to almost 45 years ago.

volvomax

Believ it or not, Lexus threatened BOTH companies.
I had friend that sold Lexus in those days, says he took alot of 5 and 7 series trades in.
As for a 45 yr old comeback, BMW was a bit player in the US until the early 80's.
You had to be a real hardcore Euro car lover to buy one in the 70's.
Yes, they sold well in Europe, but as someone said they weren't considered "luxury".

dewey

Yes, they sold well in Europe, but as someone said they weren't considered "luxury".

I prefer BMW as a non-luxury performance auto company. Unfortunately during that time I was too young to drive.

tagman

I've been saying for some time now that Lexus is deliberately targeting BMW (as well as MB) with this latest go 'round. Initially it was mostly Mercedes Benz.

Now with the current IS and the Bangled LS, there is no doubt about it. BMW's top executive agrees, if you remember the BusinessWeek article I once posted in the HELC forum. Man, did that article fire up the thread!

TagMan

designman

Dman - your missing the point I'm making. When heavy investment is needed to transcend a business - it consolidates. It's a natural occurence in business, any business. I'm not saying anyone is going to fail. I'm saying that consolidation is inevitable and consolidation happens from the top down. It's not going to happen in the next few years but in the LT it's inevitable.

To me "consolidate" it a broad general term but I think it has a more specific implication in the vernacular of finance. Are you saying that Toyota has enough capital to do what it pleases where others have to make compromises with their products, squeeze their products and operations, steal from Peter to pay Paul?

designman

Cheaper and lighter lithium ion batteries is what is going to make Toyota cash in on hybrids.

I'm actually quite interested in them. That GS450h drivetrain impresses me. But I can see them falling flat because there just isn't enough value, benefit. Plus the consumer isn't going to accept the financial burden of what it means to be green. He'll recycle and make other efforts to be clean but he won't pay for it directly, not if there are cheaper alternatives and he isn't forced to. This has to come from Government incentives and initiatives I think. As far as I can see, the biggest benefit of getting a hybrid is to ride alone in the HOV lanes and my commute doesn't have them.

Hey, are those lithium ions going to light a fire under the butts of rear seat passengers as they are doing with laptops?

;-)

designman

You had to be a real hardcore Euro car lover to buy one in the 70's.

My brother had a 2002 and I got as far as putting a deposit on a used one in 79. Chickened out and bought a new Celica instead.

Dewey, you would have loved the 2002.

ljflx

Yes - but to clarify even further what I am saying is that if you have huge technology, infrastructure or lifeblood changing investments and you sell - say 5mln cars a year vs. 1mln a year - you have a tremendous advantage as you can spread those costs much better to each unit car sale once that investment moves to maintenance mode. Toyota has the volume and the breadth of cars to sell that can absorb that investment way better than BMW. Daimler has it with Chrysler but lacks it without Chrysler. Huge investment expenditures that are needed to transcend a business always cause consolidation because the smaller guys can't afford it or any mistake they make in that process can endanger them. It's pure business and exists in any industry.

designman

Hey, I heard yesterday that Diamler-Chrysler is interested in trading Chrysler to GM for a stake in GM. Comments?

volvomax

Hey, I heard yesterday that Diamler-Chrysler is interested in trading Chrysler to GM for a stake in GM. Comments?

Not true.
GM is interested in a possible pooling of resources for R&D purposes, but they want no part of Chrysler.
Daimler should want no part of GM, talk about going from the frying pan to the fire.

designman

It may or may not be true but there is industry speculation:

Report: Daimler, GM talks intensify

volvomax

Yeah,
I've seen those reports.
I've also seen where GM has denied those reports.

Honestly, I can't see this as a good fit for GM

dewey

BMW's top executive agrees, if you remember the BusinessWeek article I once posted in the HELC forum

Oh yes I do remember. Reithoffer, BMW CEO is like all CEOs. They're very explicit about discussing exciting opportunities and their past successes but are coy and evasive in terms of discussing real threats to their company.

Reithoffer was not being upfront when he mentioned Lexus as BMW's main threat. No luxury auto marque is currently a threat to BMW. The real threat to BMW is Toyota in general but not Lexus specifically.

The real threat to BMW will happen when consumers' priorities shifts away from performance/handling and towards environmentally friendly fuel efficient cars. And there is one car company that can best exploit this change in consumer preferences to their favor and that car company is called Toyota.

In fact there is a great article in this week's Economist. I will post some blurbs below from the article.


There were howls of protest, not least from Angela Merkel, the German chancellor. So the proposed ceiling was raised a little, to 130 grams of CO2 per kilometre to be met by 2012. This still left the makers of many of the world's most prestigious cars with the most work: in the European Union only six German-made models meet the target, but 34 of those made by competitors do. Moreover, of all the cars on sale in Germany which pump out more than 200g of CO2 per kilometre, most are German

German cars may well continue to dominate the performance parts of the luxury market—after all they are crammed with state-of-the-art technology. But buyers' tastes are changing and they have increasing qualms about the environment. This shift in the market is what has hit Chrysler's sales in America, because it is highly dependent on fuel-thirsty sport-utility vehicles (SUVs) and pick-up trucks.

Even Germnay's Chancellor see's the green threat towards the German auto industry. And German automakers like BMW
are least prepared for such changes.

I think you can agree with me that buying a Porsche or a BMW is not a rational decision but strictly an emotional decision. But what if emotoins regarding car purchases becomes over-ruled by future technologies and governement regualations?

Dieter Zetsche at DaimlerChrysler, Wendelin Wiedeking, who runs Porsche, and Norbert Reithofer at BMW, have their feet a little closer to the ground. But, however solid and sophisticated the engineering of their products, it is the emotion of driving the marque that really commands the premium. Can that emotion survive in a world in which drivers face more restrictions and greater awareness of the damage they may be doing to the environment?

The biggest threat to the German motor industry could be a disruptive technology, such as a totally new source of power (unlikely) or (more likely) the gradual decoupling of personal mobility from emotion. Judging by the aspirations of millions of Indians and Chinese for the personal mobility offered by the motor car in their countries, that may not happen for years in emerging markets. But in industrialised countries, where the infrastructure allows it, car-driving is increasingly being integrated with traffic management, safety aids and environmental protection.

And what auto company would be best to handle the above changes? Yes that is right, Toyota ofcourse. No wonder the CEO of BMW is nervous.

I do admire Toyota for their innovativeness with regards to hybrid technology. Another weakness with BMW and all German automakers is their timidness in introducing such new innovations like hybrid technologies in the recent past.

, the average age of models proffered by the big European carmakers is increasing—in other words new models are in decline relative to sales volume, according to research by Mr Pieper at Metzler. Whereas German carmakers have proved brilliant at re-engineering and refining their existing platforms, they seldom show the flair associated with something truly innovative.
The apparent complacency of Mr Reithofer at BMW, in a recent interview, says it all: he attributes BMW's growth to increased sales volume, cost cutting and greater efficiency. “We're admired by Toyota for our production flexibility,” he said. “We are able to change specifications to a vehicle just six days before it is produced.” He said little about new concepts that will take BMW out of the gas-guzzling end of the market. The company's answer to the American public's recoil from buying large SUVs, such as its X5, has been to produce the X3, which is smaller but not much more environmentally friendly

dewey

Hey, are those lithium ions going to light a fire under the butts of rear seat passengers as they are doing with laptops?

Only if I am clothed with a bright orange flame retardant airforce flying suit then yes I would drive such a hybrid.

I remember fond childhood memories of being driven in a BMW 2002 and that is probably why I like BMWs so much today?

dewey

Agree!

Unfortunately Mergers work only if there are synergies between the two companies. In the case of Daimler Chryler the two auto culture worked together dysfunctionally.

In fact so dysfunctionally that there are rumors that Daimler will have to pay someone to takeover Chrysler:

As it stands, not only would a leveraged-buyout firm balk at paying at all for Motor City's number three -- it would probably insist on being paid.

Here is why. Chrysler should be worth about $10 billion if its 2009 pretax return on sales hits its 2.5% target. Trouble is, that's more than wiped out by the $13 billion of unfunded healthcare and pension liabilities it's carrying. On top of that, turning the company around even to this lowly point requires spending almost $5 billion on investments, layoffs and plant closures, according to Daimler.

SOURCE: WALL STREET JOURNAL

And yes I know exactly what you are saying. R & D in the auto industry is inflating at a fast pace and sooner or later only big companies will be able to fund such endeavors.

But whose to say that everything in a car company has to be developed in-house. Germany consists of hundreds of auto suppliers that makes the existence of smaller car companies possible. As I said in another post outsourcing is becoming a bigger trend in the auto industry. The big exception is Toyota which continues to be a vertically integrated company that develops most of its technologies in-house.

Bigger is not neccessarily better.

Look at the stock markets and compare the stock price performance of nimble player like Porsche and BMW and then compare their performance with big players like Ford, GM and even VW(although VW share prices recently got a boost).

volvomax

I do admire Toyota for their innovativeness with regards to hybrid technology. Another weakness with BMW and all German automakers is their timidness in introducing such new innovations like hybrid technologies in the recent past.

It is not timidity.
it is a belief that hybrid technology is an expensive dead end.
Right now, the Germans are getting very good results w/ diesel technology.
They have invested heavily there.
As for the X5, it does sell well for BMW.People are still willing to pay for the vehicle that they want.
BMW's demographic is better shielded from fluctuations in the economy.
Higher gas prices don't mean a turn away from their products like it did for the Big 3.

anthonyp

What do you all make of the current stock market prices---after today--- Any good ideas?? Tony

dewey

Hi Anthony,

today's global stock market declines are quite baffling since no new news was involved.

No major bad news from Corporations.
China may raise interest rates? Old news.
A suicide bombing in Afghanistan? What else is new (except in this case Dick Cheney was within the neighborhood of the blast and this did not involve any duck hunting)
A large drop in durable goods? Durable goods fluctuates on a monthly basis. Nothing new with that.
The housing market and subprime lending ailments? That is already old news.
Greenspan's rumblings on a future recession? What else is new (remember his irrational exuberance speech)

The Dow's fall today was the largest point decline since the stockmarkets opened after 9/11. At least we knew why stockmarkets fell back then. In this case it is hard to know what exactly triggered today's downfall. :confuse:

dewey

The new diesels are impressive.

But how many environmentalists would prefer a cleaner diesel over a hybrid? Environmentalism whether you are a believer or not is the new upcoming religion of the 21st century. If you want proof just keep your eyes on Al Gore's environmental campaigning ( I predict he will be the new elected President in 08).

ljflx

Ouch - It hurt that's for sure. But It was overdone and hurt further by a 2 minute screw-up around 3PM that made the fallout look 150-200 points worse than it really was. That made even more people want to bail which just exacerbated the situation. IMO - valuations are still reasonably low, market is still undervalued (at levels before the sell off) and economy is still quite strong. I think a lot of people were looking for a reason to sell (even Greenspan's recession comment wasn't enough 24 hours earlier) and used the first good excuse that came along. It was hard to find reasons to sell before this. With all that said - you need a day like this in a good bull market as much as you need a great rally day in a bad bear market.

ljflx

Dewey - I don't know who caught this or not but I'm a big science nut and do a lot of reading in that area. With spaceships orbitting Mars the last 10-15 years there have been a lot of studies on Mars land and atmosphere temps. Guess what. The martian temps are increasing hand in hand with earth temps in the same time period and there's no SUV's or greenhouse gases on Mars from a bunch of careless humans. The sun's also going thru a warming phase and is likely the cause of the increased heat on Earth and Mars. But perception often means more than reality and Gore thinks he's an oscar winning movie star now and you're right, he may ride that star right into Washington. On that day, or the days leading up to it - I sell my whole stock portfolio.

volvomax

Environmentalists are good people, but lousy businesspeople.

Hybrids are far more toxic to the environment that diesels are, if you factor in building costs, running costs, disposal costs.
The next generation of diesels wil be as clean as gasoline cars, less expensive to build than hybrids, offer better power and similar mileage.
Remember, hybrids really only work on small lightweight cars.
When you go to an SUV or full size sedan, the hybrids advantage over a diesel disappears.

dewey

Exactly.

I am no expert but temperatures do go through natural cycles independent of human activities. What is missing with all the media coverage is that there is no definite proof that links human activities with global warming .

By the way I read some where that Gore's home in Nashville uses 12 times the electricity of an average US household. Hyporcisy indeed!