STUTTGART (dpa-AFX) - The global automotive industry is in decline - and German carmakers in particular are feeling the effects of the crisis. The operating profit of Volkswagen, Mercedes-Benz and BMW amounted to around 7.1 billion euros from July to September - and thus fell by almost half compared to the third quarter of 2023. This is shown by an analysis of the key financial figures of the world's 16 largest car manufacturers carried out by the auditing and consulting firm EY.

Turnover was also in reverse gear: in the third quarter, German car manufacturers generated six percent less, totaling 145.4 billion euros. The first six months of the year were already anything but rosy for the companies from Wolfsburg, Stuttgart and Munich: compared to the same period last year, profits fell by 18 percent from January to June, while turnover fell by 0.4 percent.

However, the weakening automotive economy affected the entire industry in the third quarter: the revenue of all the companies surveyed fell by 1.9 percent to around 485.9 billion euros. Earnings before interest and taxes (EBIT) amounted to a good 29 billion euros - around 23.7 percent lower than a year earlier. With an increase in profits of 23 percent and eight percent growth in turnover, car manufacturers from the USA in particular have recently come up trumps.

"The next few years could be brutal"

EY industry expert Constantin Gall said: "The German car manufacturers in particular have had a pitch-black quarter." The records of the post-corona years had concealed deep-rooted structural problems that are now coming to light without mercy. For example, the German automotive industry is finding it difficult to keep up with the pace of new competitors in the electric sector - for example from China. The costs are too high, the equipment too cumbersome. "The next few years could be brutal."

The automotive industry is in crisis due to the weak economy and is suffering from a lack of demand, especially for e-cars. Ford plans to cut 2,900 jobs in Germany by 2027. At the plant in Koln, which has been completely converted to electric and is already on short-time working, one in four jobs is to be cut. At VW, wage cuts, plant closures and job cuts are on the cards. According to the works council, three plants and tens of thousands of jobs are under threat. Suppliers Bosch, ZF, Continental and Schaeffler are also planning to cut thousands of jobs due to problems with competitiveness, among other things.

Growing concerns in China

The crisis is also visible in the number of cars sold. Most large corporations sold fewer new cars than a year earlier. Overall, sales fell by 5.6 percent. Only a few companies such as Tesla and Ford were able to sell more vehicles.

The situation in the important Chinese car market in particular is worsening. With the exception of Tesla - the e-car manufacturer increased sales by 30 percent - all manufacturers recorded double-digit sales losses in the third quarter. At 17 percent, the Germans' decline was slightly below the average for all manufacturers. Almost every third vehicle was still sold in China during this period. In 2020, this figure was still almost 40 percent.

According to the data, the rapid shift towards e-mobility and the emergence of local manufacturers who are aggressively pushing into the market are increasingly becoming a problem for Western companies in the People's Republic: "There is fierce cut-throat competition in China, which is heavily based on price. There is currently not much to gain here for the established companies," said Gall. But simply because of the size of the market, withdrawal is not an option.

Suzuki is the most profitable car company

According to the EY analysis, the times when German car manufacturers were among the most profitable in the world are also over: Due to the slump in profits, their margin, which puts operating profit in relation to sales, has almost halved to 4.9 percent. The average margin for all companies was 6.0 percent (minus 2.0 points).

At 12.7 percent, Suzuki was the most profitable car manufacturer. The Japanese company led the rankings in the third quarter, ahead of Kia (10.9 percent) and Tesla (10.8 percent). Mercedes-Benz was in seventh place with a profit margin of 7.3 percent. BMW followed in ninth place with 5.2 percent and Volkswagen lagged behind in twelfth place (3.6 percent). Of the 16 companies analyzed, three were able to improve their margins in the third quarter, while the others recorded a decline in profitability.

Challenges too great?

In Gall's view, European car manufacturers in particular have no choice but to reduce their costs and at the same time work on their technological competitiveness: Because despite falling profitability, billions would have to be invested - for example in the areas of software and battery technology, but more recently also in the further development of the combustion engine again.

"This balancing act could overwhelm some companies, which could lead to mass redundancies and, in the medium term, to a new wave of consolidation in the automotive industry." This makes it all the more important for companies to improve their internal structures. "Massive cuts, especially in administrative costs, are unavoidable," says Gall. Expenditure on research and development by German manufacturers rose by twelve percent to 8.3 billion euros in the third quarter - a record figure according to EY./jwe/DP/mis