Only in the downturn will it become clear which car manufacturer has really done its homework.
(Photo: AP)
30.6 billion euros. That’s how much money Volkswagen, Mercedes-Benz and BMW earned together in the first half of the year. Net.
It is an absolute record amount, several billion more than the record last year. And that despite the fact that the domestic car trio is currently actually struggling with a slump in sales totaling 1.4 million vehicles.
But since customers have had to wait several months or even years for a new car due to a lack of chips and wiring harnesses, the corporations have been enjoying creative freedom. They remove discounts and raise prices.
Interested parties have so far swallowed the surcharges without much grumbling. Fewer cars, more profit: This has been the banal business equation in the industry for some time.
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Now, however, there are increasing signs that the era of fat profits for the industry is coming to an end. It is questionable how long potential customers will be willing to accept further price increases in view of high inflation, rising interest rates and an extremely uncertain energy supply, at least in Europe. BMW boss Oliver Zipse is already warning of “economic headwinds”. Buying behavior is changing.
The Munich-based company’s overflowing order books are likely to level off at a lower level by the end of the year, particularly in Europe. And the enormously high marketing revenues that the industry is currently generating with leasing returns could also drop noticeably. It is not a sustainable situation when used vehicles sometimes cost as much as new cars.
As soon as demand, which is still robust at the moment, falls and the old discount battles break out again, the big party for car manufacturers will be over. The corporations should now arm themselves for this time and review their entire cost structure again. Especially since the companies will only really feel the price rally for battery raw materials such as lithium or nickel with increasing volumes of electric vehicles.
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Many board members in Wolfsburg, Stuttgart and Munich are currently celebrating their record results. However, only in the downturn will it become clear who has really done their homework and can keep margins high despite an increasingly rough environment.
Individual groups should be able to do this thanks to structural adjustments; the general public rather not. For the foreseeable future, the car companies will no longer be able to earn money as easily as they have recently. The industry may face a wave of profit warnings.
More: BMW cuts sales target and warns of “economic headwind”