Latest Quarterly Reports: - German Car Firms Experience Slower Start in 2022, Says Research
At the start of the year, German vehicle manufacturers faced a setback in the worldwide comparison, as revealed by a study conducted by the consulting firm EY. "With a 1.7% revenue decrease and a reduction in earnings of a quarter, the three German car companies performed substantially worse than the majority of their competitors," EY informed everyone on Wednesday.
Together, Volkswagen, BMW, and Mercedes-Benz brought in revenue of approximately 148 billion euros. This was still the second highest sum in the first quarter since the study's inception. For the analysis, EY examined the financial records of the 16 largest automakers on the planet. The analysis has been ongoing since 2011.
When compared to the previous year's period, the sales of all firms increased by 3.9% to around 493 billion euros in the first quarter. The profit before interest and taxes (Ebit) was roughly 33.8 billion euros, which represented a 0.7 percent increase over the prior year. Notably, car manufacturers from Japan impressed: This was due to the yen's ongoing depreciation, which made Japanese products more affordable abroad and led to exchange rate gains.
Kia took the lead as the most profitable automaker at the start of the year, with a margin of 13.1%. South Korea's companies ranked first, followed by BMW (11.1%) and Mercedes (10.8%). The latter was the most profitable enterprise in the previous year, with Stellantis coming in second. Opel's parent company didn't disclose any information about profits. Tesla's profit margin, originally at 11.4%, dropped to 5.5% in the year before.
The headwind facing the automotive sector is getting stronger, according to EY market observer Constantin Gall. "The sales of the top automakers were slightly falling in the first quarter, with demand still significantly below pre-pandemic levels," he mentioned. From January to March, the manufacturers sold roughly 15.5 million cars, which is about three million fewer cars than in the first quarter of 2019.
A rapid turnaround doesn't seem likely, given Gall's perspective. "The economy is weakening, geopolitical tensions are causing uncertainty in numerous areas, while the unclear development of electric cars is also posing a challenge," he explained. In Europe and the US, electric cars sold poorly. The debate about which technologies will prevail remains unclear, so the industry must invest in multiple drive systems simultaneously.
The Chinese automotive market poses a significant challenge for Western providers. "Domestic manufacturers are gaining more ground, especially in the electric vehicle segment. The competition is fierce," Gall added. While carmakers boosted their passenger car sales in Europe by three percent and in the US by almost six percent, they experienced a decrease of two percent in China. German manufacturers had a slight increase in China. In the first quarter, 33.2% of their global new car sales came from China.
Read also:
- Despite the sluggish start for German car firms in 2022, Mercedes-Benz, based in Stuttgart, Baden-Württemberg, Germany, continued to contribute significantly to the overall revenue.
- The quarterly figure for Mercedes-Benz, along with Volkswagen and BMW, amounted to approximately 148 billion euros, making it the second highest sum since the study's inception.
- In the international automobile market, BMW, another prominent car company from Germany, faced stiff competition from Kia, which became the most profitable automaker at the start of the year.
- Volkswagen, headquartered in Lower Saxony, Germany, experienced a 3.9% increase in sales compared to the previous year, contributing to the overall growth in the first quarter turnover.
- Constantin Gall, an EY market observer, highlighted the challenges faced by the car industry, including weakening economies, geopolitical uncertainties, and the uncertain development of electric vehicles.
- The turnover of the automobile sector, including brands like Mercedes-Benz, BMW, and Kia, was slightly decreasing, with demand remaining significantly below pre-pandemic levels, according to Gall's analysis.
- In contrast to the Asian market, where carmakers like Kia experienced growth, the German manufacturers selling electric vehicles struggled in Europe and the US, reflecting the ongoing debate about which technologies will prevail.
- Despite facing challenges, including fierce competition from Chinese domestic manufacturers in the electric vehicle segment, German manufacturers like Mercedes-Benz managed to secure 33.2% of their global new car sales in China during the first quarter.
