According to the consulting firm Ernst & Young (EY), car manufacturers will have to adjust to a more difficult business environment in the future despite high sales. “The days of dream margins will soon be over,” said EY industry consultant Peter Fuss, based on an analysis of key figures from the world’s 16 largest car companies published on Friday. The reason is, among other things, that the supply of semiconductors should normalize in the coming months and that car production could pick up speed again.
So far he had chip shortage acted as a limiting factor, explained the head of mobility division Western Europe at EY, Constantin Gall. “The rare semiconductors are mainly installed in high-margin vehicles; at the same time, the manufacturers hardly have to grant price reductions, but can even push through price increases in some cases.” This has recently boosted sales.
Buyers become reluctant
According to Fuss, there are currently increasing problems on the demand side due to the energy crisis and the impending global recession. There is also no sign of relaxation in the material, logistics and energy prices. Also the sales market in China continue to weaken. In the second quarter, sales for the industry giants collapsed by 24 percent. bmw, Volkswagen and Mercedes Benz together recorded a minus of 19 percent.
Profit margin falls below 8 percent
According to the EY study, car companies worldwide achieved significantly higher sales from April to June 2022 despite lower sales figures compared to the same period in the previous year. However, the average profit margin, i.e. the share of operating profit in sales, fell from 9.8 percent to 7.9 percent. The industry is thus approaching the figures from before corona pandemic on.
Among the German car manufacturers, VW and BMW in particular lost profitability. Mercedes-Benz was able to roughly maintain the value from the same quarter of the previous year.
Down 24 percent in China, down 21 percent in the US
Companies in China saw the sharpest drop in sales, where sales fell by 24 percent. In the United States it went down by 21 percent, in Western Europe by 17 percent.
With sales of almost 70 billion euros, Volkswagen was the front runner Toyota (61 billion euros) and Stellantis (44 billion euros). The highest profits were recorded by Mercedes-Benz (EUR 4.6 billion), Volkswagen (EUR 4.5 billion) and Toyota (EUR 4.2 billion).
Tesla just ahead of Mercedes-Benz in terms of profit margin
When it came to profit margins, on the other hand, Tesla ahead: The Californian electric car manufacturer achieved a margin of 14.6 percent, putting it ahead of Mercedes-Benz (12.7 percent) and Kia (10.2 percent). At 7.9 percent, the average margin of the companies examined was significantly lower than in the same period of the previous year (9.8 percent) and only slightly above the pre-pandemic level: between 2013 and 2019, the average profit margin of the car companies was 6.7 percent .