FRANKFURT: BMW is following other German carmakers in pumping up its financial liquidity to ride out the coronavirus crisis, its chief executive said Friday, as car sales in the auto-mad nation booked their steepest plunge in almost 30 years in March.
“Circumstances as serious as this can threaten the existence of even a large company,” BMW boss Oliver Zipse said in an interview circulated to staff.
“We have already introduced large-scale measures, in particular to secure our liquidity,” Zipse added, calling the steps an “absolute priority” but without going into details.
High-end competitor Daimler, which builds Mercedes-Benz cars, said Thursday it had agreed a new 12-billion-euro ($13 billion) credit line with banks, “increasing its financial flexibility.”
A hint at the pressure on carmakers came from Volkswagen boss Herbert Diess last week, when he said virus-imposed shutdowns were costing the sprawling 12-brand giant up to two billion euros per week.
Official data showed new registrations of cars on German roads plunging in March to their lowest in almost three decades.
Sales tumbled 38 percent year-on-year to just over 215,100, according to the KBA vehicle licensing authority.
“Necessary health policy measures, like the massive limits on public life, closure of car dealerships and limited ability to work in the licensing offices” had braked the car trade, the VDA carmakers’ federation said.
Domestic demand fell 30 percent, while foreign orders were down 37 percent.
In a quarterly comparison, sales in January-March were down 20 percent year-on-year.
“April is likely to be even more catastrophic,” analysts from consultancy EY predicted.
In European virus epicenter Italy, where lockdown restrictions are even harsher, transport ministry figures released Thursday showed sales collapsing by more than 85 percent year-on-year in March.
At just over 28,300 cars registered, Italian sales were “at a level comparable with the early 1960s, when mass car ownership in our country was just getting started,” experts at car industry research center Promotor commented.
“Forecasts for the coming months call for similar or even worse falls until the crisis is over,” they added.
In Germany, “even if the acute crisis were overcome in summer, the economic and social consequences — massive increase in unemployment, plunges in income, bankruptcies — will continue to squeeze demand strongly,” EY predicted.
Ratings agency Moody’s expects the global auto market to contract 14 percent in 2020.
Up to 100,000 of the roughly 800,000 jobs in Germany’s massive auto sector could be at risk, according to recent estimate from University of St. Gallen expert Ferdinand Dudenhoeffer.
To weather the impact of the coronavirus restrictions, major manufacturers like Volkswagen, Mercedes-Benz parent Daimler and BMW have closed factories and placed tens of thousands of workers on government-funded shorter hours schemes.
Chancellor Angela Merkel said this week that restrictions on public life would be extended to at least April 19, including a ban on gatherings of more than two people and the closure of many businesses such as restaurants.
BMW in dash for cash as German car sales plummet amid coronavirus chaos
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BMW in dash for cash as German car sales plummet amid coronavirus chaos
- Chancellor Angela Merkel said this week that restrictions on public life would be extended to at least April 19
Saudi stocks rebalance after Kingdom opens market to global investors
- Foreign access reforms trigger short-term volatility while underlying market fundamentals hold
RIYADH: Saudi Arabia’s stock market experienced a volatile first week following a landmark decision to fully open the market to foreign investors—a move analysts view as essential to funding the Kingdom’s sweeping economic transformation plans.
The Tadawul All Share Index began the week with a sharp decline, falling 1.89 percent on Feb. 1, the same day new regulations eliminating key restrictions on international investment officially came into force. The index rebounded the following session and remained in positive territory for three consecutive days before slipping once more, ultimately ending the week down 1.34 percent.
Ownership data from Tadawul as of Feb. 1 indicated that foreign non-strategic investors reduced their holdings in nearly half of the companies listed on the TASI. An analysis conducted by Al-Eqtisadiah’s Financial Analysis Unit showed that foreign ownership declined in 120 firms, increased in 97 others, and remained unchanged across the remainder. Despite these shifts, the total number of shares held by foreign investors showed no overall change.
Speaking to Arab News, economist Talat Hafiz addressed the initial volatility in the TASI, explaining: “Stock markets in the Kingdom and globally naturally experience fluctuations driven by profit-taking and price corrections.”
He added that the index’s decline and subsequent recovery “appears to be primarily the result of technical and sentiment-related factors rather than a direct reaction to the opening of the market to foreign investors.”
Hafiz emphasized that this was particularly evident given that foreign participation in the Saudi market is not entirely new, having previously existed under alternative regulatory structures.
The market turbulence coincided with sweeping reforms enacted by the Capital Market Authority and announced in January. These measures included the removal of the restrictive Qualified Foreign Investor framework, which had imposed a $500 million minimum asset requirement, as well as the elimination of swap agreements. The reforms aim to attract billions of dollars in fresh investment while improving overall market liquidity.
Hafiz noted that an initial surge of foreign capital was widely expected to generate short-term volatility as portfolios were rebalanced and liquidity dynamics adjusted. However, the rapid recovery of the index suggests that the market’s underlying fundamentals remained strong and that investor confidence was not significantly undermined.
Earlier in January, experts had told Arab News that the reforms could unlock as much as $10 billion in new foreign inflows. Tony Hallside, CEO of STP Partners, described the move as a pivotal evolution, signaling that the Kingdom is committed to building the most accessible, liquid, and globally integrated financial markets in the region.
Hafiz reinforced this optimistic outlook, stating that broader market access is likely to yield positive effects by boosting liquidity, widening participation, and supporting overall market recovery—ultimately contributing to greater long-term stability once near-term adjustments ease.
He said: “TASI’s swift rebound reflects the market’s constructive response to increased openness and deeper investor participation.”
Hafiz said he does not believe the market opening is primarily intended to function as a conventional financing channel. Instead, he argued that its broader objective lies in the internationalization of the Saudi market, a goal underscored by its inclusion in major global indices.
He explained that attracting foreign capital should be understood less as a short-term funding solution and more as a structural reform aimed at strengthening market depth, efficiency, transparency, and global integration.
The Saudi economist added that while increased foreign participation can indirectly support Vision 2030 by enhancing liquidity and reducing the cost of capital, the opening of the market is “not designed as a direct mechanism to revive or fast-track projects that may have faced funding constraints.”
Rather, it creates a more resilient, globally connected financial ecosystem that can sustainably support long-term development ambitions, according to Hafiz.
As the market continues to stabilize, investors and observers are monitoring which sectors are expected to attract the largest share of investment in the coming weeks and months.
Hafiz told Arab News that foreign investment is expected to initially focus on companies operating in strategically significant, high-growth sectors such as healthcare, transportation, and technology, in addition to mining, energy, and telecommunications.
He added that experienced foreign investors are likely to gravitate toward firms demonstrating strong financial disclosure practices, sound corporate governance, adherence to environmental, social and governance standards, and a track record of consistent dividend payouts.
