KOZMINSKI UNIVERSITY

Fundamental Analysis

BMW
Yevgeniy Sydorenko ID 26481

Academic Year: 2016/2017

Semester: Winter

Kozminski University 2016

Contents
Introduction..................................................................................................................... 3
Company Overview......................................................................................................... 3
Macro Analysis/PESTEL.................................................................................................... 4
Political and Economic Forces...................................................................................... 4
Social and Technologic Forces...................................................................................... 4
Environmental and Legal Forces.................................................................................. 4
Global Car Industry Analysis........................................................................................... 4
Overview of the Car Industry....................................................................................... 4
Industry Attractiveness................................................................................................ 6
Key Segments by Geography.................................................................................... 6
Premium Market Assessment.................................................................................... 7
Key Success Factors.................................................................................................. 7
Porters Five Forces Analysis..................................................................................... 8
Company Analysis........................................................................................................... 8
Performance Trend....................................................................................................... 8
Sales by Regions and Trend......................................................................................... 9
DRIVE Analysis.............................................................................................................. 11
Valuation....................................................................................................................... 12
FCFF calculations....................................................................................................... 12
Multiples..................................................................................................................... 12
Conclusion and Recommendations...............................................................................13
References.................................................................................................................... 14
Appendices.................................................................................................................... 16
Appendix 1: BMW Sales segment and Operating Profit..............................................16
Appendix 2: PESTEL analysis for BMW.......................................................................16
Compare Analysis Gross Profit Margin with German Big Three..................................18
Appendix 4: Global players such as BMW are considered to be the best prepared....19
Appendix 5: DRIVE Analysis....................................................................................... 19

Introduction
The car industry is one of the most dynamic industries in the world with globalization
continuing to force companies to restructure, and keep up with the driving demand of
both consumers as well as industry regulations. Subsequently, companies are
constantly monitoring industry attractiveness for both survival as well as growth.
Capabilities are seen as key to gaining competitive advantage in a rapidly changing
market with joint ventures, alliances and M&A seen as a necessary ingredient for the
automobile industry to operate successfully internationally while driving sales and
reducing manufacturing costs. Corporate strategies have evolved to include
sustainable practices and rapid technological advancements with no auto maker willing
to forego market share (Potter, 2016).
This report will analyse BMW Group (BMW) corporate direction based on the macro
environment and internal capabilities whilst providing recommendations that will add
value, advance market share, sustain shareholder interests and remain a global player
in an unforgiving industry.

Company Overview
BMW was established in 1926, the German company initially began operations in the
production of engines and in 1928 ventured into the automotive sector. The parent
group Bayerische Motoren Werke (BMW AG) operate three segments, Motorcycles,
Financial services and the most profitable Automotive sector (Appendix 1). The
company owns three premium brands, BMW, MINI and Rolls Royce. The minis lineage
traces back to British ancestry established in 1959, it was known as an immensely
popular iconic small car and was part of a series of acquisitions which eventually
formed part of the Rover Group owned by British Leyland which BMW acquired in 1994.
However in 2000 the Rover group broke up and BMW retained the Mini brand (BMW,
2016).

The Rolls Royce brand was established in 1906, BMW acquired exclusive license rights
to the British companys name in 1998 from its parent company Rolls-Royce PLC as
well as trademarks from Volkswagen. BMW AG established the wholly owned subsidiary
under a new entity known as Rolls-Royce Motors which did not start producing cars
until 2003. All three brands are highly regarded today and BMW is a global leader in
the premium sector (BMW, 2016).

Macro Analysis/PESTEL
A macro analysis utilizing the PESTEL framework is adept at showing environmental
factors that impact the automotive industry (Johnson, 2016).

Political and Economic Forces

Car makers and governments share a powerful relationship as their success is
interdependent on the level of global, political and economic stability. Key strategic
alliances1 benefit global manufactures such as BMW and align both performance and
investor confidence. While economic solidity such as level of available credit,
disposable income and taxation, are key drivers for new and existing buyers (Potter,
2016).

Social and Technologic Forces

Understanding consumer behavior is challenging for the automobile industry for
instance in developing countries such as China, Russia and Brazil a display of wealth
through ownership of premium cars is considered a symbol of social status. Moreover
despite technological advances and increasing demand for safer, high-tech and ecofriendly cars the data does not show a positive link with sales.

Environmental and Legal Forces

Governments around the globe constantly monitor, tighten and increase compliance to
environmental regulations. Strict tariff policies for foreign car makers in countries like
Russia may threaten BMW as countries may curtail foreign investment, growth or
demand alliances with domestic manufacturers. (For a detailed PESTEL analysis refer
to Appendix 2).

Global Car Industry Analysis

Overview of the Car Industry
The car industry is showing strong signs of recovery, particularly in developing
countries. In 2009, China surpassed the traditional USA automobile market, reporting
growths of 24% between 2005 and 2011 (KPMG, 2016).

Additionally, the number of cars sold in developed markets within Western Europe, USA
and Japan has shifted to emerging economies particularly BRICS and ASEAN which
currently, boast 60% of all sales worldwide hence, outpacing the total number of sales
in NAFTA, EU and Japan (KPMG, 2016).

Figure1. Global Passangers Cars Saled (2012-2016)

60000000
4562282

50000000

4572333
4203181

40000000

3905310

6833529

3509036
7363460

9039036
8639763

6569033

30000000
26294715

21039621

22679959

24324085

1270882

1610327

1672710

2153897

2353264

14166410

13406111

13181252

12095546

11887502

2012

2013

2014

2015

2016

16346828

20000000

10000000

EU

ASEAN

BRICS

NAFTA

Japan

Source: www.oica.net/category/sales-statistics/

For five consecutive years BRICS has remained the leader in car production, in 2016
alone over 26 million cars were produced, with the remaining regions EU, NAFTA and
ASEAN producing 23 million combined (figure 1). This trend is expected to continue as
BRICS and NAFTA expand their production facilities with new plants (WSJ, 2015).
Subsequently, in line with the changing environment BMW are also producing new
plants in Brazil, Russia and the NAFTA region (figure 2) (BMW, 2016).

Figure 2. World Passangers Cars Production By Region

30000000
26132073
25000000

23654094

22101221

20817071
20000000
15956715
15260094
13998907
15000000

10000000

8310362

6862161
5000000

1669941

2012

1664333

2013
EU

ASEAN

14637950

2285155

2014
BRICS

NAFTA

14640306

8554503
6959318

7158525
5624553

5084330

3960731
1188259

15708191

2015

8189323
7106013
2627181

2016

Japan

Industry Attractiveness
The analysis on the industrys attractiveness based on geography and KSFs
characteristics are discussed below:

Key Segments by Geography

BMWs key success factors (KSF) can be attributed to their customer preference
awareness as well as their knowledge of differing geographical markets and
segmentation. The market is mainly divided in two parts: developed markets (triad
countries) and emerging markets (BRICS countries). It is important to note that despite
the fact that BRICS present an opportunity for growth the triads are still considered to
represent the largest source of revenue (KPMG, 2016). Developed markets contain
many similar KSFs between themselves, this is comparable to emerging markets that
may differ across regions but on the whole maintain similar KSFs (figure 3).

Premium Market Assessment

The premium segment notably includes the highest prices and profit margins, thus
representing 10% of the global automotive industry sales (McKinsey, 2015).

Key Success Factors

The premium car segment releases new models yearly in combination with extensive
investment in design and technology. Thus differentiation and innovative development
within infotainment are critical to ensure continued growth in market share.
Furthermore, BMW is increasingly utilizing digital communication platforms for instance
Twitter, Facebook and YouTube to ensure customer loyalty and maintain long term
relationships.
Further attention on improving customer experiences through the use of mobility
requirements, quality and durability of their products and their emphasis on corporate
social responsibility combine to their key success factors, for instance 25% of their
profits are einvested into R&D (BMW, 2016).

Porters Five Forces Analysis

Porters five forces model is a useful tool to analyse the external level of competition
within the premium cars market segment (figure 4).

Company Analysis
Performance Trend
Despite the high volatility within the car market BMWs sales volume has increased
over the last 5 years. During the FY2016 BMW reported historical levels of total sales
for all three brands with a total of 1,963,798 vehicles sold worldwide (figure 6).
Nevertheless, the growth ratio has declined by more than half since the FY2013 from
13.6% to FY2013 to 6.4%. Thus BMW decreased their pace of growth possibly due to a
mature market and high competitive environment. Irrespectively, BMW retains its
leading position within the premium segment.

BMWs sales have consistently increased for the past 10 years, its FY2016 revenue has
doubled since FY2007. During the recession (FY2012-2013) the gross profit margins
dipped but quickly increased thereafter. Despite this progress the figures have not
reached pre-recessions levels (figure 7). Regardless BMWs profitability still
outperforms its German competitor Audi, but struggles to outclass it primary
competitor Daimler. There are a number of reasons that may explain this discrepancy,

for instance it is possible that vehicle selling prices have not increased in the past five
years or that production costs have increased due to heavy investment in
technological advances (appendix 3).

Sales by Regions and Trend

Traditionally sales of BMW tend to focus on broad triad regions such as EU, North
America and Asia-Pacific. However, the most lucrative market gains are notably
Germany, USA and China who combined generate over 50% of total sales (figure 8).

Subsequently, the 5 years sales trend from FY2012-FY2016 follow the logic of the
industry analysis discussed earlier which shows the lack of growth within the German
market, depicting a decreased growth ratio. Alternatively, the USA has remained the
same but this may possibly change as BMW builds new production plants in order to
keep up with the recovering USA automobile industry (BMW, 2016).
China has rapidly tripled its growth from 7% to 20% in the same period capturing
19.7% of BMWs total sales. On the other hand the Americas share of sales sit at 6%,
but their pace of growth is more than 50% thus significantly outpacing the USA.
Consequently, BMW ought to leverage the opportunity of potential growth and sales in
BRICS countries.

DRIVE Analysis
The analysis below will provide a succinct summary of the internal audit. For a detailed
DRIVE analysis, refer to (Appendix 5).

Figure 12: DRIVE Analysis

Distinctive Capabilities

Resource Gap
Issues of Concern

Viable Options

Expectations

Brand Image: Luxury, quality & design

- German-made high quality manufacturing
- Interior and exterior designs
- Infotainment
Unique Brands
- Rolls Royce, Mini & BMW
High customer loyalty
High cost structure
Small group: too few acquisitions & strategic partnerships
High competition
Green awareness & environment protection regulations
Currency exchange & Oil price
Price strategy
Strategic alliances:
- Another car maker to increase the market share
- Infotainment & OEM
- Suppliers
- Share platforms eg. Aston Martin
- Toyota to develop the new technology
Re-Investment
Shareholders
- Market Share
- Equity
Customers
- Infotainment
- Premium car experience & prestige
Source: adapted from Potter, 2013

Valuation
FCFF calculations
FCFF Projections (in Mil)

2008

2009

2010

2011

2012

2013

2014

20152016E

2017E

EBIT

921

289

5 111,00

8 018,00

8 275,00

7 979,00

9 117,00

9 906,52

10 631,61

Taxes

0,49

0,49

0,33

0,34

0,34

0,32

0,33

0,32

0,32

468,31

146,95

3 415,41

5 329,04

5 420,16

5 387,39

6 090,57

6 761,27

7 256,15

7 715,

3 670,00

3 600,00

3 682,00

3 646,00

3 541,00

3 741,00

4 170,00

4 765,63

5 327,11

5 890

EBIT(1-T)

Depreciation and amortization

Operational Impairments

11 305

44

69

21

18

252

195

223,5

223,5

22

Total Investments

8 919,00

4 556,00

7 153,00

10 502,00

7 211,00

6 926,00

13 594,00

6 870,17

12 973,97

12 433

Variation NWC

4 715,00

1 085,00

3 890,00

6 823,00

1 975,00

233

7 495,00

465,01

6 267,47

5 260

4 204,00

3 471,00

3 263,00

3 679,00

5 236,00

6 693,00

6 099,00

6 405,16

6 706,50

7 172

-4 736,69

-740,05

-53,59 -1 505,96

1 768,16

2 454,39 -3 138,43

4 880,23

-167,21

1 396,

Capex
FCFF
Terminal Value
WACC

128 318,66
0,032

Discount factor
PV FCFF
FIRM VALUE
MV Debt
Cash
Pension Provisions
Equity
# shares
Po

10 709,53

0,97

0,94

4 727,48

-156,91

1 269

139 028,20
70 702,98
7 688,00
4 604,00
71 409,21
656,5
108,77

Source: Own calculations

Multiples

Source: www.sharewise.com/us/instruments/BMW/analysis

BMW AG is considered undervalued in both of its historical P/S ratio and peer P/S ratio
comparison analysis. As a result, this stock is therefore currently considered
'undervalued'. However NMW AG would be considered 'overvalued' if its price
exceeded 112.89 $.
Currently, BMW AG is considered 'undervalued' by the valuation because its P/S ratio is
lower than its historical average.
On the other hand, the P/S ratio of this stock tends to have a high correlation with the
average of domestic companies in the same industry. As a result, many investors may
estimate the trend of its sales by comparing the company with sales trends of
domestic companies in the same industry. As a result, BMW AG is currently considered
'undervalued' based on its peer comparison analysis because its P/S ratio is lower than
the average P/S ratio of domestic companies in the same industry.

Conclusion and Recommendations

On the basis of historical data listed below I can say that BMW showing itself in a good growing
position.

Sales of cars in 2016: + 6.1% y / y. This was faster than the overall world market (+
3.3% y / y in new registrations)
Revenue in 2016: 14.6 y / y to 92.175 billion euros amid rising vehicle sales and
favorable currency fluctuations
Net profit in 2016: + 10%, EUR 8.4 billion
The debt burden remained virtually unchanged since the end of 2014 debt ratios D / E
and the net debt / E at the end of 2015 were at a level of 2.14 and 1.73. Almost all the
debt, "hanging" on the balance of the financial unit, which is characterized by such a
loan burden
Dividend payments in 2015: + 11.8% y / y, 1.917 billion euros
BMW shares dividend yield stands at 4.14%

It is good basis to BUY, but we have to consider the following risks:

A stronger slowdown in world economic growth than previously expected

Stock market decline. Market risk BMW shares is higher than the market (beta = 1.34
shares)
Industry risks: Volkswagen scandal can "spill" on competitors

In my opinion, the risks of investment in shares of BMW is now linked with external factors - the
economy and the industry (Volkswagen scandal), and not with the company itself.
Against the background of falling stock prices and the growth of the company's revenue
multiples were at fairly low levels. In comparison with analogues (BMW, Daimler, Toyota) BMW
shares traded around an average level, but BMW makes cars exclusively premium, which
reduces business risks. Compared with the industry is not undervalued, but is rather a whole
group peers underestimated, and the main driver of BMW growth of quotations on the stock
exchange will be performing market factors rather than factors unique BMW (the company so
great results). If we compare with the German equity market, the paper BMW look more
profitable the other "blue chips": on CNN Money According to the average P / E DAX index
companies is 18.4. BMW, in turn, is trading at x7.6 annual profits. In relation to its own historical

values of multiples P / E, P / B, P / S, BMW shares are undervalued by an average of

14%.Against the background of excellent financial results and the low value of the shares on the
stock exchange shares of BMW may show good growth in future years.
Target price of BMW stock in the future 12 months - 85 euros. Now one paper BMW at
the Frankfurt Stock Exchange is 74.98 euros.

References
1.
24/7 Wall ST (2013) Car Brands with the Most Loyal Drivers [online] Available
from: http://247wallst.com/special-report/2013/07/08/car-brands-with-the-most-loyalcustomers/2/ [Accessed on 19 February 2015].
2.
Bloomberg (2015) Rolls-Royce Confirms Plans for Super-Luxury SUV [online]
Available from: http://www.bloomberg.com/news/articles/2015-02-17/rolls-royceannounces-plans-for-super-luxury-suv [Accessed on 28 February 2015].
3.
BMW (2014) Annual Report 2013. [online] Available from:
http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/finanzber
ichte/geschaeftsberichte/2013/_pdf/report2013.pdf [Accessed on 3 February 2015].
4.
BMW (2014) iDrive. [online] Available from:
http://www.bmw.com/com/en/insights/technology/technology_guide/articles/idrive.ht ml
[Accessed on 6 February 2015].
5.
BMW (2014) Press Release BMW Innovations at the 2015 Consumer Electronics
Show (CES) in Las Vegas. 360-degree collision avoidance and fully-automated parking
in multi-storey car parks. [online] Available from:
https://www.press.bmwgroup.com/global/pressDetail.html?title=bmw-innovations-atthe-2015-consumer-electronics-show-ces-in-las-vegas-360-degree-collisionavoidance&id=T0198231EN [Accessed on 6 February 2015].
6.
BMW (2015) TOMORROW'S TECHNOLOGIES. [online] Available from:
http://www.bmw.com/com/en/insights/technology/efficientdynamics/phase_2/
[Accessed on 3 February 2015].
7.
Evalueserve (2012), Platform Strategy will Shape Future of OEMs Flexibility to
Drive Growth [online] Available from: https://sandhill.com/wpcontent/files_mf/evalueservewhitepaperplatformstrategywillshapefutureofoems.pdf
[Accessed on 6 February 2015].
8.
Forbes (2014) BMW Is Testing A Vehicle That Can Be Controlled With A
Smartwatch
[online] Available from: http://www.forbes.com/sites/amitchowdhry/2014/12/19/bmw-istesting-a-vehicle-that-can-be-controlled-with-a-smartwatch/ [Accessed on 6 February
2015].
9.
Forbes (2014) Worlds Most Valuable Brands. [online] Available from:
http://www.forbes.com/companies/bmw-group/ [Accessed on 19 February 2015].
10.
Intrabrand (2014) [online] Available from:
http://www.bestglobalbrands.com/2014/bmw/ [Accessed on 19 February 2015].

11.
Johnson, G. (2014) Exploring strategy: text and cases Tenth edition. edn,
Pearson, Harlow.
12.
KPMG (2015) KPMGs Global Automotive Executive Survey 2015 [online]
Available from:
http://www.kpmg.com/global/en/issuesandinsights/articlespublications/globalautomotive-executive-survey/pages/2015-report.aspx [Accessed on 3 February 2015].

13.
Luxurysociety (2014) Record Sales For Luxury Car Brands in 2013 [online]
Available from: http://luxurysociety.com/articles/2014/01/record-sales-for-luxury-carbrands-in-2013 [Accessed on 27 February 2015].
14.
McKinsey (2014) The road to 2020 and beyond: Whats driving the global
automotive industry? [online] Available from:
http://www.mckinsey.de/sites/mck_files/files/mck_the_road_to_2020_and_beyond.pd f
[Accessed on 2 February 2015].
15.
OICA (2013) WORLD MOTOR VEHICLE PRODUCTION Available from:
http://www.oica.net/wp-content/uploads/2013/03/worldpro2012-modificationranking.pdf [Accessed on 3 February 2014].
16.
OICA (2014), Sales statistics by country [online]. Available from:
http://www.oica.net/category/sales-statistics/ [Accessed on 3 February 2015 ]
17.
Potter N.S. (2013) The Global Automotive Industry: Facing up to Uncertainty and
Rapid Change, lecture notes distributed in Strategic Analysis of Business, at the
University of Birmingham, UK.
18.
Potter N.S. (2013) Why SWOT when you can DRIVE, lecture notes distributed in
Strategic Analysis of Business, at the University of Birmingham, UK.
19.
Telegraph (2013) Aston Martin signs engine deal with Mercedes-AMG [online]
Available from: http://www.telegraph.co.uk/luxury/motoring/19368/aston-martin-signsengine-deal-with-mercedes-amg.html [Accessed 1 March 2015]
20.
The Guardian (2015) Rolls-Royce to make off-road vehicle (but don't call it an
SUV)
[online] Available from: http://www.theguardian.com/business/2015/feb/18/rolls-roycemake-luxury-off-road-vehicle-suv-4x4 [Accessed on 28 February 2015].
21.
Thomsonone (2015) Trusted Financial Content for Superior Decision Making
[online] Available from: https://www.thomsonone.com/Workspace/Main.aspx?
View=Action%3dOpen&BrandName=www.thomsonone.com&IsSsoLogin=True
[Accessed on 2 March 2015].
22.
UN (2014) Kyoto Protocol [online] Available from:
http://unfccc.int/kyoto_protocol/items/2830.php [Accessed on 6 February 2015].
23.
WSJ (2014) BMW Readies U.S. Factory Expansion [online] Available from:
http://www.wsj.com/articles/SB10001424052702304026304579451632920837764
[Accessed on 12 February 2015].

24.
WSJ (2015) Aston Martin Outlines an Expanded Lineup [online] Available from:
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Appendices
Appendix 1: BMW Sales segment and Operating Profit

Appendix 2: PESTEL analysis for BMW

Political factors

The level of stability in countries and alliances have to be constantly examined

as the industry is highly regulated. Changes in political parties and free trade
agreements may lead to additional schemes and codes of practice, increasing costs for
car companies.

When further expansion is considered at an international scale, taxes and

government foreign policies are critical points to be considered. Importing and
exporting processes may begin to lag particularly in bureaucratic countries while
driving the cost up in some developing countries like Brazil and Russia.

Economic factors

Currency exchange rate fluctuations, particularly the US dollar impacts price

strategy ensuring that both car makers and suppliers pay close attention.

GDP fluctuations directly affects sales. During the 2008 crisis, car sales were
significantly declining however, the recovering economy is now seeing an upwards
trend especially in US and BRICS countries.

The declining oil prices conveys positively for automakers as consumers are
inclined to buy vehicles due to the low cost of petrol.
Social factors

Changes in customer preferences, predominantly in emerging markets where

owning a premium car is symbolic with a high social status and significantly impacts
sales.

Although sales of low emission cars are not comparable to traditional ones,
modern society is becoming conscious of the negative impact vehicle emissions have
on the environment. Manufacturers ought to be environmentally aware and lower CO2
emissions while communicating their social awareness to consumers to strengthen
brand image.

The increasing population in countries like China, Brazil and Russia, especially in
the young adults group, means more sales opportunities for car manufactures.

Technological factors

Technology advances are a necessary factor for car companies to gain

competitive advantage. Gadgets like the BMW Watch and Wi-Fi access in premium cars
are trends that must be incorporated sooner than later as they will become the
benchmark differentiation for young executives/professionals when vehicle hunting.

Improvements in R&D over the last few years follow the current trend of using
alternative, less damaging fuels and cannot be decreased otherwise sales will be lost
to competitors.

Environmental factors

The car industry is heavily regulated and car makers are required to be flexible
and quickly adapt to avoid paying further taxes or even embargo in some countries.
This means continued investment in R&D and transparent communications with the
general public much like the example of BMW who publish not only in an annual report
but also advertise in social media.

Utilization of natural resources is important, particularly water. Regulators and

consumers alike abhor wastage and excessive wastage may impact brand image
negatively.

NGOs such as Greenpeace are actively looking for any gaps in complying with
regulations and the impact of the construction of new plants in green fields is
keptunder surveillance. Environmental scandals are detrimental to an automakers
reputation.

Legal factors

Compliance with legislation is essential for maintaining a good relationship with

local government. As a highly regulated industry, inconsistencies can have huge
consequences including capital loss, court proceedings and even loss of licence.

The premium sector sees a mass import and export of car parts and depending
on the protection level in some countries, trading may become cumbersome. Alliances
such as NAFTA, EU and BRICS permit local players to trade freely within trade countries
but there is always the possibility of regulations changes thus automakers must be
agile and responsive.

Competition in the industry is fierce. Any new release is quickly imitated, in

countries like China perhaps more so. Patents and copyright laws ought to be enforced
combined with the launch of new innovations to ensure positive market positioning.

Compare Analysis Gross Profit Margin with German Big Three

Appendix 4: Global players such as BMW are considered to be the best

prepared

Source: KPMGs Global Automotive Executive Survey 2015

Appendix 5: DRIVE Analysis

Distinctive Capabilities
BMWs positive brand image is based on German made high quality manufacturing,
especially the engine technology. At the same time, people think BMW cars have the
luxury interior and exterior designs with many infotainment, such as BMW watch
(Forbes, 2014), iDrive, which changes normal car to smart phone car (BMW, 2014) and
so on. Furthermore, this group has three unique brands, such as Rolls Royce, Mini and
BMW. All of them have different images for customers.

Resource Gaps
Even though BMW expanded the manufactures in all over the world, BMWs cars are
very expensive, as they keep higher quality for engines, visual, infotainments than
other non-premium brands. In addition, BMW is much smaller than TOYOTA or GM
groups, since BMW implemented M&A and built strategic partnerships in fewer times
than such giant groups. This fact is one of the biggest reasons of BMWs small market
share in BRICS countries.

Issues of Concern
Although BMW had the highest sales in the premium market which is really
competitive, as is followed by Audi with the gap 75,138 unit sales in 2013 (Figure I). As
UN2 adapted Kyoto Protocol in 2012, all automotive company has to consider about
green awareness and also regulations of environment protection (UN, 2014). On the
other hand, currency exchange market and oil prices are issues to the firm, because
BMWs main revenue comes from non-EU countries. For example, in 2013 it had in
NAFTA 17% and in BRICS 49% (BMW, 2014). Furthermore, BMW should consider its
price strategy and the reduction of its cost maintaining the quality, as it has expensive
products and one of the highest costs of ownership in this industry (Figure II).