According to a study by the consulting firm EY, the world’s largest car manufacturers have had to accept cutbacks in profitability. According to the analysis, compared to the same period of the previous year, sales in the first quarter of the year rose by around 19 percent to a record value of 494 billion euros, but earnings before interest and taxes (EBIT) lagged behind with growth of 6.1 percent. Sales increased by just 4 percent.
Profitability – measured by the EBIT margin, which puts the operating result in relation to sales – fell from 9 percent to 8 percent. The new margin leader among the 16 automakers analyzed was Mercedes Benz with an EBIT margin of 14.7 percent. Followed by bmw (14.6 percent) and Kia (12.1 percent). The former front runner, the electric car maker Tesla, came fourth with 11.4 percent.
“For the first time since the beginning of 2021, we are seeing clear signs of slowing down in profits, which are no longer increasing as rapidly as sales,” said Constantin Gall, head of the Western Europe mobility division at EY. The market is normalizing. “A new car will soon no longer be the scarce commodity it was last year,” said Gall. It is therefore becoming increasingly difficult for car manufacturers to push through high vehicle prices on the market and to forego discounts. “The days of dream margins will soon be over for some companies.”
In addition, most manufacturers are currently making significantly higher profits with combustion engines than with electric vehicles, said EY industry consultant Peter Fuss. Manufacturers must succeed in making electric cars produce more. And: “There is no way around more cost discipline, otherwise there is a permanent threat of significantly lower profitability.”