New car in reverse gear

New car in reverse gear

The auditing and consulting company EY prepares a quarterly analysis of the financial indicators of the 16 largest car companies in the world. The result: While the German car manufacturers went into reverse - their sales fell by six percent, car sales by nine percent, profits even by 50 percent - other manufacturing nations were at least able to increase their sales: The sales of the US car companies rose by a total of eight percent, the Japanese manufacturers grew by one percent. However, most large companies sold fewer new cars than a year before: Overall, car sales of the 16 largest car companies fell by six percent, with the biggest losses reported by Stellantis (minus 14 percent), BMW (minus 13 percent) and General Motors (minus nine percent). However, a few companies - including the US car manufacturers Tesla and Ford - were able to sell more vehicles than in the previous year.

Gone are also the days when German car manufacturers were among the most profitable in the world: Due to the slump in profits, the margin of German car manufacturers as a whole has almost halved from 9.1 to 4.9 percent. Japanese manufacturers only recorded a decline in margins of 2.3 percentage points, while US manufacturers' margins even rose by 0.8 percentage points. The most profitable car company in the third quarter was the Japanese car maker Suzuki with 12.7 percent, ahead of Kia (10.9%) and Tesla (10.8%). Mercedes-Benz is in seventh place with a profit margin of 7.3 percent, BMW is in ninth place with 5.2 percent and Volkswagen is in twelfth place with 3.6 percent. Of the companies analyzed, three were able to improve their margins in the third quarter, while the others reported declining profitability. "The slump in the automotive industry, especially in Germany, is of course also affecting Austria. We have numerous suppliers to the automotive industry in this country," says Axel Preiss, Head of Advanced Manufacturing & Mobility at EY. "The high margins after the Corona period have obscured deep-seated structural problems that are now becoming visible: China is pushing ahead in terms of e-mobility, but in the German auto industry the costs are high and the equipment is too cumbersome. Quick solutions are needed for this."

From Preiss' point of view, European car companies in particular have no choice but to actively reduce their costs and at the same time work massively on their technological competitiveness: "Falling margins with high investment requirements - for example in the areas of software and battery technology - are a huge challenge for companies." It is therefore all the more crucial that car companies optimize their internal structures, says Preiss: “Significant cuts in administrative costs are inevitable, while at the same time targeted investments must be made in areas that help companies emphasize their brand core and their value proposition.” In the last third quarter, despite the poor sales and profit development, the German car companies did not skimp on investments in the future: spending on research and development at the three companies rose by twelve percent to 8.3 billion euros - a record value.

In China, all car companies examined recorded double-digit sales losses in the third quarter - with the exception of Tesla: the electric car manufacturer increased by 30 percent. Overall, companies' sales to China fell by 18 percent, for German companies by 17 percent, for Japanese companies by 21 percent and for South Korean companies by 32 percent. The rapid change in China towards electromobility and the emergence of numerous local players who, equipped with a lot of capital, are aggressively pushing into the market is increasingly becoming a problem for Western car companies. Preiss: "There is intense cutthroat competition in China, which is mainly based on price. There is currently little to gain for the established companies. However, withdrawing from China is not an option due to the size of the market - and China is now the global lead market for electromobility: being present there with competitive products is essential." In the third quarter, German car companies handed over almost one in three new cars sold (32.6%) to a customer in China. In 2023 as a whole, China's share of total sales was slightly higher at 34.3 percent. Since 2020, when almost 40 percent of German manufacturers' car sales came from China, the importance of this sales market has steadily declined.