Automotive Market: The Party Is Over - German Manufacturers Weaken, Kia Highly Profitable

The global auto economy is weakening - and a study shows that the dampener for German car manufacturers continued in the first half of the year. In particular, profits plummeted: Taken together, Volkswagen, BMW, and Mercedes-Benz made an operating profit (Ebit) of 25.9 billion euros from January to June. This was 18 percent less than in the same period last year. This is according to an analysis by the auditing and consulting firm EY, which evaluated the financial figures of the world's 16 largest car manufacturers. 

Compared to the same period last year, overall revenue for all corporations in the first half of the year rose by 3.7 percent to just over one trillion euros. However, earnings before interest and taxes (Ebit) were 7.8 percent lower than a year ago, at 80.4 billion euros. With a profit increase of around 37.1 percent and 14.2 percent revenue growth, especially Japanese car manufacturers excelled: This was due to the ongoing depreciation of the yen, which makes Japanese products cheaper abroad and leads to exchange rate gains.

Profits could come under further pressure

EY market observer Constantin Gall stated: "The yen-driven profit growth among Japanese manufacturers disguises the reality of a much worse profit situation in the automotive industry." According to him, most other manufacturers are struggling with significant losses. "Given high investments in electromobility, supply issues with components, problematic model changes, and discount campaigns, profits will come under further pressure." Gall predicts cost-cutting measures across the board. Manufacturers have only limited influence over regulatory conditions.

"Therefore, it is all the more crucial that they optimize their internal structures, implement cost savings, and very specifically invest where it helps them highlight their brand core and value proposition."