From July to September, German automobile manufacturers were under greater pressure than at any time since the financial crisis. Taken together, sales and revenue from Volkswagen, BMW and Mercedes-Benz remained largely stable. However, the manufacturers’ operating profit (EBIT) fell by almost 76 percent. With a total of just over 1.7 billion euros, they reached the lowest value since the third quarter of 2009, according to an analysis by the auditing and consulting company EY. According to the information, no other large car country performed as weakly as Germany in terms of sales and profit development. But the industry as a whole is also in a profitability crisis. The 19 largest car companies in the world, whose financial figures were evaluated by EY, increased their sales slightly in the third quarter to around 531 billion euros. However, profits before interest and taxes shrank by 37 percent to around 18.9 billion euros. This is the lowest value since 2018. EY car expert Constantin Gall says: “The global car industry is in a deep crisis – but it is currently the German car companies that are suffering particularly badly.” The reasons for this are the general weakness of the premium segment, US tariff policy, negative exchange rate effects, high investments in electric cars that have not yet paid off – and high expenditure on restructuring companies. “All of this is currently creating a perfect storm, especially for German car manufacturers.” The Chinese prefer their own brands The upheaval is particularly noticeable in the world’s largest car market, China. Sales by manufacturers from Germany fell by nine percent there in the third quarter. China’s share of global sales fell to 29 percent. In 2020 it was 39 percent. The market is extremely competitive, Gall said. Because of the weak economy, premium cars sold less well in previous years. Above all, however, sales of electric vehicles are growing strongly. “And here the Chinese clearly prefer local brands to established Western companies.” Western manufacturers tried to take countermeasures, but there is no end to the downward trend in sight. The most profitable manufacturer in the third quarter was the Japanese company Suzuki. The margin, which relates operating profit to sales, was 9.2 percent. This was followed by BMW (7.0 percent) and Toyota (6.8 percent). Most companies retained less profit from the sales they generated from July to September. The average margin of the companies analyzed was 3.9 percent, the lowest level in at least ten years. The value has more than halved since 2023. Suppliers are suffering more than manufacturers. In the German auto industry, a number of companies have recently announced job reduction programs that will continue for a longer period of time. These include industry giants such as Bosch, ZF Friedrichshafen but also Mercedes-Benz and the Volkswagen Group with its various brands. According to the Federal Statistical Office, suppliers have recently been more affected by job cuts than car manufacturers. “The hope remains that the balance sheet clean-up will soon be completed and that the cost-cutting measures will quickly bear fruit and contribute to an improved margin,” said Gall. The job cuts – especially in Germany – are associated with high costs, but are likely to increase competitiveness in the medium term. More on the topic According to Gall, this also applies to sticking with the combustion engine for a longer period of time. “The hopes for a rapid ramp-up of electromobility have not come close to being fulfilled; at least in the western sales markets, sales figures are only increasing slightly,” said the expert. The vast majority of buyers continue to choose combustion engines – mostly as hybrids.
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