Is BMW buy opportunity after the current dip?

Bayerische Motoren Werke AG (ETR: BMW) shares have weakened more than 6% since 14th January, and the current share price stands at €93.

BMW continues to face challenges

European automakers continue to face challenges, and according to the latest news, new commercial vehicle registrations in the European Union fell 8.4% to 155,963 units in December. This came after a 14.7% decline in November and represented the six consecutive months of decline mainly due to a drop in new van sales.

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BMW also reported that brand unit sales fell 5.8% Y/Y to 98,750 units in the fourth quarter, while the sales in North America declined 6.0% Y/Y to 100,891 units.

BMW passenger car sales dropped 10.9% to 38,981 units while the sales of light trucks dropped 1.7% to 54,050 units in the fourth quarter.

Positive information is that on a full-year basis, brand unit sales have increased 20.8% on total sales of 336,644 compared to the 278,732 vehicles sold in 2020.

BMW passenger car sales have increased 18.3% Y/Y to 156,804 units for 2021, and the sales of light trucks rose 23.0% Y/Y to 179,840 units.

BMW continues to focus on speeding up electric vehicle adoption, and sales momentum remains strong as the first deliveries of BMW iX and BMW i4 electric vehicles begin.

Last month, India’s TVS Motor and BMW announced a cooperation agreement for future technologies and electric vehicles. Oliver Zipse, CEO of BMW, added:

Under this enhanced cooperation, both companies have identified a range of products and technologies to deliver significant business benefits. The companies will develop common platforms by mutually tapping the emerging technologies in the future mobility space.

On the other side, the Coronavirus pandemic continues to pose downside risks together with the supply chains crisis, and if the situation gets worse, BMW will not achieve its goals.

The German economy is particularly vulnerable to shortages of key parts and raw materials, and more than 40% of companies reported they had lost sales because of supply problems.

Many big companies scaled back production of some of their most profitable models, while the semiconductor shortage throttling global car production suggests more pain for the automotive industry.

Technical analysis

Technically looking, BMW shares could advance above the current price levels in the upcoming weeks, but this company is not undervalued with a market capitalization of €59 billion.

The current support levels are €90 and €85; €100 and €105 represent the current resistance levels. If the price jumps above €100, it would be a signal to trade BMW shares, and the next target could be around €100.

On the other side, if the price falls below €90, it would be a strong “sell” signal, and the next target could be €85.

Summary

European automakers continue to face challenges, and BMW also reported that its sales declined in the fourth quarter. BMW continues to focus on speeding up electric vehicle adoption, but the Coronavirus pandemic continues to pose downside risks together with the supply chains crisis.

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