Valuation of Bmw
| Valuation BMW Group | BUSM31 – Strategic Financial Management | 2010-10-27 | Group 14 | |
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Tutor: Authors:
Måns Kjellsson Daniel Hedevåg Jonas Karlsson Mathias Ljungberg Jakob Tuvehjelm
Background
BMW is one of the ten largest automobile manufacturers in the world, with an annual production of 1.3 million cars (2009). It is furthermore one of the leading manufacturers in the premium car segment. BMW Group brand portfolio includes in addition to the BMW brand itself the Mini and Rolls Royce motorcars. The Mini brand is a remain from 1994 when BMW bought Rover and Rolls Royce was acquired in 1998 after a few years of engine cooperation. Besides the production of automobiles BMW is a well respected producer of motorcycles, with a production of 87.000 units in 2009.
Business units sectioning
In our opinion BMW is a company which operates within two different business units; manufacturing and financial services. These units differ from each other and affect the value drivers differently. To get a fair valuation for BMW we have therefore chosen to make three different valuations, the third one being eliminations which represents the intra group transactions between the two business units.
Regarding motorcycles, we have chosen to include them in the business unit we call manufacturing. For BMW, the sales of motorcycles contributed to 2,1% of annual turnover in 2009 which in itself does not constitute a large proportion of the annual turnover. It is our opinion that there are synergies in demand as well as revenues and costs that justifies including the valuation of the motorcycle part within the sales of cars and that it therefore is no need for a separate valuation of the motorcycles.
Diagram 1 Sales of cars and motorcycles, Source: BMW Annual Report 2002-2009
Historical performance
We have chosen to compare key figures for BMW, Diagram 2: BMW cars sales in different markets. Source: BMW Annual Report
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Tutor: Authors:
Måns Kjellsson Daniel Hedevåg Jonas Karlsson Mathias Ljungberg Jakob Tuvehjelm
Background
BMW is one of the ten largest automobile manufacturers in the world, with an annual production of 1.3 million cars (2009). It is furthermore one of the leading manufacturers in the premium car segment. BMW Group brand portfolio includes in addition to the BMW brand itself the Mini and Rolls Royce motorcars. The Mini brand is a remain from 1994 when BMW bought Rover and Rolls Royce was acquired in 1998 after a few years of engine cooperation. Besides the production of automobiles BMW is a well respected producer of motorcycles, with a production of 87.000 units in 2009.
Business units sectioning
In our opinion BMW is a company which operates within two different business units; manufacturing and financial services. These units differ from each other and affect the value drivers differently. To get a fair valuation for BMW we have therefore chosen to make three different valuations, the third one being eliminations which represents the intra group transactions between the two business units.
Regarding motorcycles, we have chosen to include them in the business unit we call manufacturing. For BMW, the sales of motorcycles contributed to 2,1% of annual turnover in 2009 which in itself does not constitute a large proportion of the annual turnover. It is our opinion that there are synergies in demand as well as revenues and costs that justifies including the valuation of the motorcycle part within the sales of cars and that it therefore is no need for a separate valuation of the motorcycles.
Diagram 1 Sales of cars and motorcycles, Source: BMW Annual Report 2002-2009
Historical performance
We have chosen to compare key figures for BMW, Diagram 2: BMW cars sales in different markets. Source: BMW Annual Report