Company: Study: car manufacturers are growing - challenges in sight

According to a new evaluation, the world's largest car companies are still on course for growth.

Company: Study: car manufacturers are growing - challenges in sight

According to a new evaluation, the world's largest car companies are still on course for growth. Compared to the same period last year, sales in the second quarter of the year increased by 18.1 percent, earnings before interest and taxes (EBIT) grew by 31.3 percent.

Sales also increased by more than a tenth between April and June. This emerges from an analysis published today by the auditing and consulting company EY.

Car production is ramped up

With the exception of Tesla and Ford, all companies were able to increase their profits. The significant earnings growth was fueled by the weak yen, which helped Japanese manufacturers to increase by 91.2 percent. The development in German companies was more restrained, with operating profits rising by a good 19 percent. US automakers, on the other hand, recorded a decline of 5.7 percent.

Profitability - measured by the EBIT margin, which puts the operating result in relation to sales - was 8.8 percent in the second quarter. That was 0.8 percentage points more than a year earlier. As from January to March, the front runner was the Stuttgart-based company Mercedes-Benz with an EBIT margin of 13.04 percent. They are followed by Kia (12.97 percent) and BMW (11.7 percent).

The head of the Western Europe mobility division at EY, Constantin Gall, said: "Car production is currently being ramped up, a comfortable order cushion allows significantly more deliveries at still very good prices". Overall, the profit situation is still very good. In addition, the companies have managed to keep profitability high.

Increasing pressure for car manufacturers

However, Gall warned that the time for these margins would soon be over for many car manufacturers: "We will probably see the market turn around before the end of this year." Because when the orders from the time of the chip shortage have been processed, the car manufacturers would have to face the new reality of economic weakness, falling demand, price pressure and overcapacities.

With consequences: It is becoming increasingly difficult for them to enforce high prices on the market and to forego discounts. Against this background, Gall is also anticipating a new wave of cost reductions in the automotive industry.

"Many corporations are currently very profitable and will not allow any cuts in the margin in the future," said Gall. You would now have to pay more attention to all types of costs - such as personnel expenses.

"Especially in Germany, with its very high energy and labor costs and the high tax burden, the pressure will increase again significantly." Above all, a slowdown in the dynamics of electric cars, which is very likely in Germany, will really hurt many companies.

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