STUTTGART (dpa-AFX) - From July to September, German carmakers were under more pressure than they had been since the financial crisis. Taken together, sales and revenue at Volkswagen, BMW, and Mercedes-Benz remained largely stable. However, the manufacturers' operating profit (EBIT) slumped by almost 76 percent. At a combined total of just over €1.7 billion, they reached their lowest level since the third quarter of 2009, according to an analysis by the auditing and consulting firm EY.
According to the data, no other major car-producing country performed as poorly as Germany in terms of revenue and profit growth. However, the industry as a whole is also in a profitability crisis. The 19 largest automotive groups in the world, whose financial figures EY has expanded, increased their sales slightly in the third quarter to around €531 billion. However, earnings before interest and taxes shrank by 37 percent to around €18.9 billion. This is the lowest figure since 2018.
Car manufacturers caught in a "perfect storm"
EY auto expert Constantin Gall says: "The global auto industry is in a deep crisis – but it is the German auto companies that are suffering particularly badly at the moment." 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 the companies. "All of this is currently creating a perfect storm, especially for German car manufacturers."
The upheaval is particularly noticeable in China, the world's largest car market. Sales by German manufacturers there fell by nine percent in the third quarter. China's share of global sales fell to 29 percent, down from 39 percent in 2020. The market is extremely competitive, Gall said. Due to the weak economy, premium cars sold less well in previous years. Above all, however, sales of electric cars are growing strongly. "And here, the Chinese clearly prefer domestic brands to the established Western corporations." Western manufacturers are trying to counteract this, but there is no end in sight to the downward trend.
Suzuki is the most profitable car company
The most profitable manufacturer in the third quarter was the Japanese company Suzuki. Its margin, which compares operating profit to sales, was 9.2 percent. It was followed by BMW (7.0 percent) and Toyota (6.8 percent). Most companies saw their profits decline between July and September as a percentage of sales. The average margin of the companies analyzed was 3.9 percent, the lowest level in at least ten years. Since 2023, the figure has more than halved.
In the German automotive industry, a number of companies have recently announced job reduction programs that will continue for some time. These include industry giants such as Bosch and ZF Friedrichshafen, as well as 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.
Does job cutting have positive effects?
"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 improved margins," Gall said. Job cuts – especially in Germany – are associated with high costs, but are likely to increase competitiveness in the medium term.
According to Gall, this also applies to the continued use of combustion engines. "Hopes for a rapid ramp-up of electric mobility have not been fulfilled, at least in Western markets, where sales figures are rising only slightly," the expert said. The vast majority of buyers continue to opt for combustion engines, mostly in the form of hybrids. /jwe/DP/zb
