Global automobile giants grapple with dwindling vehicle sales and decreasing profitability levels.
Automakers worldwide are struggling with dropping earnings and profit margins. Over the first half, the top 16 companies witnessed an 8% decrease in profits and a 2% decline in sales, as per advisory firm EY. The majority of manufacturers haven't been doing great, but Japanese automakers are seeing a silver lining due to a weaker yen, boosting the overall average.
Japanese manufacturers, specifically, have enjoyed a 14% revenue growth and a staggering 37% profit increase. On the other hand, German manufacturers experienced a minor 0.4% decline in revenue and a more substantial 18% drop in profits.
The automakers are especially worried about their performance in China. As per EY, while sales in Europe and the US have grown by 2.9% and 0.8% respectively, they've plummeted by 11.2% in China. German companies have managed to fare slightly better, with their Chinese sales dropping by 6.9%.
Korean company Kia led the way, boasting a profit margin of 13.1%. Although German manufacturers Mercedes-Benz (10.9%) and BMW (10.8%) slipped slightly, they still ranked second and third in profit margin. However, Stellantis and Tesla endured major drops in profitability, falling from 13.8% to 7.8% and 10.5% to 5.9% respectively.
The reasons for the struggling earnings and profit margins among automakers globally might be linked to the manufacturing of motor vehicles, as they are experiencing declines in sales and profits. Despite this, Japan has seen a 14% revenue growth and a 37% profit increase in the manufacture of motor vehicles, benefiting from a weaker yen.
