The global automotive industry is weakening – and according to a study, the setback for German car manufacturers continued in the first half of the year. In particular, the result dropped: taken together Volkswagen, BMW and Mercedes Benz from January to June an operating profit (EBIT) of 25.9 billion euros. That was 18 percent less than in the same period last year. This emerges from an analysis for which the auditing and consulting company EY evaluated the financial figures of the world’s 16 largest car manufacturers.
Compared to the same period last year, sales for all companies rose by 3.7 percent to a good one trillion euros in the first half of the year. At 80.4 billion euros, earnings before interest and taxes (EBIT) were 7.8 percent lower than a year earlier.
Car manufacturers in particular came out on top with a profit increase of around 37.1 percent and 14.2 percent sales growth Japan on: This was due to the ongoing decline in the value of the yen, which makes Japanese products cheaper abroad and leads to exchange rate gains.
Profits remain under pressure – further austerity measures expected
“The profit growth among Japanese manufacturers based on currency effects glosses over what is actually a much worse profit situation in the auto industry,” said EY market observer Constantin Gall. Most other manufacturers are therefore struggling with heavy losses. “In view of high investments in electromobility, delivery problems for components, problematic model changes and discount campaigns, profits will come under even further pressure.”
Gall predicts austerity measures across the board. Manufacturers would have only limited influence on the regulatory conditions. “It is therefore all the more important that they optimize their internal structures, make cost savings and at the same time invest in a very targeted manner where it helps them to emphasize their own brand core and their own performance promise.”
Kia is the most profitable car company, Tesla’s margin is falling significantly
Manufacturers’ profitability was under pressure in the first half of the year: the average EBIT margin, which compares operating profit to sales, fell by one percentage point to 8.0 percent. Kia was the most profitable car company with 13.1 percent. The South Koreans lead the ranking ahead of Mercedes (10.9 percent) and BMW (10.8 percent), both of which had to lose ground when it came to the margin compared to the previous year. Also the margin of the electric car manufacturer Tesla fell significantly compared to the previous year – from 10.5 to 5.9 percent.
The negative trend in sales has recently accelerated. After a decline of 0.6 percent in the first quarter, the decline was 3.3 percent from April to June.
There are no signs of rapid improvement. The economy is weakening and customers’ willingness to buy is low, said Gall. Added to this is the uncertain future of the internal combustion engine and home-made problems such as expensive software failures. In Gall’s opinion, manufacturers are now faced with difficult investment decisions in this mixed situation.