Folks often ask me what I would own if I could pick any “everyday” ride. Among cars, a BMW 5-Series. My SUV of choice would be the Porsche Cayenne.

BMW CEO Harald Krueger:

Yes, I admire German cars, despite the exorbitant pricing and the gouging of buyers who fail to tip-toe through the options list. German maintenance costs are also high.

On the whole, though, Volkswagen, Porsche, Audi, BMW and Mercedes collectively represent a fortress of automotive genius. The premium ones seem utterly impervious to the whims of wealthy buyers in particular and middle class societal trends in general. From a distance, it has long seemed that the Germans are unstoppable – even a billion-dollar global emissions scandal.

So, it was with great interest that I just read that “BMW Will Be the First to Go.” Oblivion? What?

Value Analyst, a respected Seeking Alpha contributor, is among the naysayers who believe BMW has a big problem with its branding, something being undermined further by a problematic balance sheet, legal troubles and low margins for a German premium automaker. Disruption in the auto industry – autonomous vehicles, car-sharing, electrification, and so on – will obliterate some car companies and BMW “will be the first to go.”

If you drive a BMW, keep it. If you own BMW shares, liquidate, argues Value Analyst.

Let’s dig into the case against BMW, starting with sales. BMW is a laggard in Canada, the U.S. and around the world. Canadian sales have inched up just 1.3 per cent to date, notes DesRosiers Automotive Consultants. That in a market up 5.0 per cent on the year. BMW of North America sales are down 3.2 per cent.

This makes little sense. Luxury car sales are exploding – up 7.4 to 18.0 per cent, depending on the segment in Canada. How bad are things for BMW versus its peers? Audi sales are up 18.7 per cent, Porsche is up 15.8 and Mercedes is up 12.2 per cent.

BMW has invested heavily in a long-range strategy to develop lightweight and electrified vehicles such as the i8 supercar.

Globally, BMW sales look rosier, until you dig. BMW is paying a price for sales that were up 3.7 per cent through the first three-quarters: third quarter pre-tax profit (EBT) was off 5.9 per cent and margin was down to 10.3 per cent. BMW, we can conclude, is buying sales. This is dinging profits and denting margin.

Moreover, the threats to BMW’s future health are many and varied. Tesla, while still incinerating billions, has a brand positioned to whack BMW the hardest among the Germans. If the Model 3 ever does come to market in significant numbers, it seems best positioned to T-bone BMW’s 3-Series more than any other single model.

Clearly, BMW has bungled the launch of its i-brand, which in a smart business plan would have positioned the Bavarian automaker to crush Tesla in an auto industry shifting to an electrified future. Worse, in the short term, BMW’s SUV offerings are not as varied as they should be in a market crazy for SUVs.

Which brings us to pickups. Sales are booming in North America, yet only Mercedes has moved into the pickup business with the X-Class. True, the X-Class is not for sale in North America – yet. Surely, a Merc pickup is coming to these shores. Nothing of the sort from BMW, Porsche, or Audi.

Perhaps BMW’s highly leveraged balance sheet explains why the Bavarian automaker isn’t pushing into pickups, and seems to lag rivals in other areas. Funding new products, technologies and services like Car2Go might become an even bigger problem to a BMW potentially facing liability costs associated with reports that the German car business colluded on technologies for decades.

Here’s something truly cringe-worthy: Dieselgate has cost Volkswagen tens of billions of dollars in fines and settlements with more costs coming, yet BMW has a third VW’s cash and equivalents on its balance sheet.

But in all this, let’s not forget that BMW is a resilient company that has been controlled by the Quandt family for decades. In past crises, BMW has proven resilient and inventive, and when pressed, family-controlled BMW can make quick decisions. Moreover, the BMW brand is powerful, owner loyalty is strong and the company is stuffed with innovative engineers and creative designers.

BMW has its problems and challenges, but only a fool would say the company is in peril. In the meantime, I will continue to love the 5-Series.

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