German vehicle manufacturers have never been as rich as they are now. According to research by the Munich-based Unicredit bank, BMW, Daimler and Chrysler currently have around EUR34bn in the bank. Furthermore they are expected to bring in a further EUR 26.5bn in the next year.
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Unicredit analyst, Georg Stürzer, told Automobilwoche that the German OEMs are well prepared for increased competition in the sector, and should be able to continue to pay higher dividends to shareholders. The OEMs are also in a good position to invest in new more environmentally-friendly powertrains.
The cash reserves are generated from so-called Free Cash Flow. They show up if a manufacturer still has funds left over from investments after it has paid for things such as research and development. The size of this Free Cash Flow is often considered a more realistic indicator of a company’s financial position than profitability.
The Unicredit analysis shows that German OEMs are fundamentally very healthy. Daimler has the most cash thanks to its recent sale of Chrysler. This year they generated 7.1bn euros Free Cash Flow, and next year are expected to generate 8.9bn euros. Volkwagen ranks second place with 4.3bn euros in 2007 and an expected 2.7bn in 2008. BMW follows with a regular annual Free Cash Flow of between one and two billion euros.
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