The world’s largest car companies are growing strongly in the third quarter. But an expert warns that things are no longer going smoothly for the industry. But that also has consequences for customers.
The world’s leading car manufacturers have recently significantly increased their sales and profits. In the third quarter of the year, sales of the 16 largest car companies rose by 11 percent to 504 billion euros compared to the same period last year, and earnings before interest and taxes (EBIT) increased by 35 percent to 39 billion euros, according to an analysis by the auditing company. and consulting firm Ernst & Young (EY). According to EY, an important reason was currency effects in Japan, where the weak yen gave Japanese car manufacturers a 103 percent increase in profits.
Mercedes-Benz is ahead in terms of profitability
Profitability – measured by the EBIT margin, which relates the operating result to sales – increased slightly from 7.2 to 8.6 percent. The most profitable is the German car manufacturer Mercedes-Benz with a margin of 13 percent. Followed by Toyota with 12.6 percent and BMW (11.3 percent). Volkswagen ended up at the bottom with 6.2 percent.
Nevertheless, things are no longer going well for the global auto industry, said auto expert and head of the Western Europe mobility division at EY, Constantin Gall: “The coming year will be significantly more challenging.” Demand for new cars is weakening, the ramp-up of electromobility is stalling, and price pressure is increasing. Problems with the introduction of new models put a strain on profitability because there was a lack of sales and development costs were higher than planned.
“The red pencil is now ruling again”
According to the expert, more and more manufacturers are responding with discounts, affordable financing offers and special models. But that often puts a strain on the margin. According to Gall, many companies want to reduce their costs accordingly. “The red pencil is now ruling again, because many car companies are suffering from excessive internal bureaucracy and processes that are too complex – which consumes large sums of money and impairs competitiveness,” said Gall.
The switch to electromobility will be a crucial test for the industry. “However, there are currently increasing concerns that customers will not follow the ambitious transformation of mobility towards electromobility,” said the EY expert. Although the market is being flooded with new electric cars, customers are more cautious than expected.
Source: Stern
