Study: German Car Manufacturers Experience Setback at the Beginning of the Year

At the beginning of the year, German car manufacturers had to take a hit in an international comparison, according to an analysis.

"With a revenue decrease of 1.7 percent and a profit drop of a quarter, the three German car companies as a whole developed significantly worse than the majority of their competitors," the auditing and consulting firm EY announced on Wednesday.

Combined, Volkswagen, BMW, and Mercedes-Benz generated revenue of around 148 billion euros. This was still the second-highest value in a first quarter since the study has been conducted. For the analysis, EY evaluated the financial indicators of the 16 largest automobile manufacturers worldwide. The survey has existed since 2011.

Compared to the same period last year, the revenue of all companies increased by 3.9% in the first quarter to around 493 billion euros. Earnings before interest and taxes (EBIT) stood at around 33.8 billion euros, 0.7% higher than a year earlier. Particularly, the car manufacturers from Japan excelled with a profit increase of around 87% and a revenue growth of 17%. This was due to the ongoing devaluation of the yen, which makes Japanese products cheaper abroad and leads to exchange rate gains.

Kia is the most profitable car manufacturer at the beginning of the year

Profitability slightly declined: The average EBIT margin, which relates operating profit to revenue, was 7.4%. With 13.1%, Kia was the most profitable car manufacturer. The South Koreans lead the ranking ahead of BMW (11.1%) and Mercedes (10.8%). The latter was still the most profitable group for the entire year 2023, ahead of Stellantis. The owner of Opel did not provide any profit indications in the first year. The margin of the electric car manufacturer Tesla dropped from 11.4% to 5.5% compared to the previous year.

Headwinds for the automotive industry are increasing, according to EY market observer Constantin Gall.

“In the first quarter, new car sales of the top car manufacturers slightly declined, and demand is far from reaching pre-pandemic levels,” he reported.

From January to March, manufacturers sold around 15.5 million cars, which is about three million fewer vehicles than in the first quarter of 2019. 

EY Expert: No Quick Recovery in Sight

According to Gall, a quick recovery is currently not foreseeable: The economy is weakening, and geopolitical tensions and wars are causing significant insecurity in many regions.

"Additionally, the unclear development of e-mobility is slowing things down: Sales of electric cars are developing disappointingly both in Europe and the USA," he stated.