x Abu Dhabi, UAESunday 23 July 2017

Rolls-Royce sales dip is just a drop for BMW

What's down Forecast for German firm's shares remains relatively positive.

Rolls-Royce buyers hit a wall last year. Sales of the ritzy wheels dropped 17.3 per cent from the year before, with even Abu Dhabi's elite thinking twice before committing to such luxury purchases; the capital slipped from being home to Rolls-Royce's top-selling dealership worldwide in 2008 to having the fourth-best-performing dealer.

But analysts say the dip is barely a bump in the road for Rolls-Royce's parent company, BMW Group. While Rolls-Royce is an important status brand, it contributes just a fraction to BMW Group's overall revenues. The group - which includes BMW cars, the Mini Cooper and BMW's motorcycle line - sold 1,286,310 vehicles last year, just 1,002 of which were Rolls-Royces. "It's a small number of units," said Sven Diermeier, a senior analyst focusing on car companies at the Frankfurt firm Independent Research. "Rolls-Royce is not such an important factor for BMW, so I think it [the small sales figure] is not a problem."

Last year, BMW stock rose 72.8 per cent on the Frankfurt Stock Exchange, even though overall sales fell 10.4 per cent. Yesterday afternoon, the stock was trading at about ?32. Even though the market for luxury goods is likely to remain soft, the forecast for BMW stock is relatively positive, Mr Diermeier said. The so-called "cash for clunkers" programmes in which the German and US governments offered financial incentives for consumers to buy new cars have expired. The programmes typically benefited car makers at the lower end of the price spectrum.

And since those incentives for consumers to buy less expensive makes are no longer in effect, BMW could enjoy a boost in sales. "The public aid for the automobile industry ends with the end of 2009, and so we will see a setback for the volume manufacturers, not the premium manufacturers" such as BMW, Mr Diermeier said. @Email:aligaya@thenational.ae