BMW, VW lead drop in car stocks on Beijing quota

Bayerische Motoren Werke (BMW) , Daimler and Volkswagen (VW) led a decline in European automakers’ stocks after Beijing’s city government decided to limit the number of new passenger cars to ease road congestion.

BMW, the world’s leader in luxury-car making, slumped as much as 5.8 per cent in Frankfurt trading, the steepest intraday decline since May 19. Daimler fell as much as 5.1 per cent, the biggest drop since July 27. Preferred shares of Volkswagen, Europe’s largest carmaker, dropped as much as 5.7 per cent.

Beijing, ranked as having the world’s worst traffic congestion, will issue a quota of 240,000 new vehicle license plates through a lottery system next year, with about 88 per cent allocated to individual buyers, according to a December 23 statement. The quota is one-third of the number of new passenger cars registered this year, said Shin Chung Kwan, an analyst at KB Investment & Securities Co.

“It remains to be seen to what extent traffic limitations are eventually realised but it’s possible that Beijing may only be the beginning,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler who recommends buying VW, Daimler and BMW shares.

BMW was down 5.3 per cent at ¤59.89 as of 4.04 pm Daimler, whose Mercedes-Benz division ranks second among luxury brands after BMW, fell 4.4 per cent to ¤51.68. VW declined 4.8 per cent to ¤122.

Volkswagen, counting China as its biggest market, said last month that its two joint ventures in the country will spend ¤10.6 billion ($13.9 billion) in the world’s biggest auto market through 2015, adding two factories to help double production to 3 million cars a year. VW has nine Chinese plants and its 11- month sales in the country, including Audi, Skoda and VW brands, surged 38 per cent from a year earlier to 1.82 million vehicles.

Volkswagen’s global spending plans in the next five years total ¤51.6 billion, including ¤11.6 billion for Audi, outlined by division Chief Financial Officer Axel Strotbek on December 13 and reiterated by the unit today.