Asia (bbabo.net), - The largest automakers closed the third quarter of the year with record results, according to the results of a study by the international audit and business consulting company EY, published on November 28.
In a survey of 16 industry leaders, EY found that the July-September period was the best third quarter ever for auto manufacturing in terms of operating profit, i.e. earnings before interest and taxes (EBIT) and revenue.
Despite the slowdown in the economy and the difficult geopolitical situation, the demand for cars is still strong, especially for premium cars. The supply of semiconductors and other materials and components is improving, and cars can sell for high prices, so this year's third quarter has been "fabulous" for automakers.
Operating profit increased by an average of 28% compared to a year earlier. In this metric, German automakers performed particularly well, growing by 58%, outperforming US and Japanese competitors, which averaged 38% and 2% growth respectively.
Mercedes-Benz is in first place with an operating profit of €5.2 billion, Volkswagen Group is in second place with €4.3 billion.
In terms of sales, the largest automakers also achieved an average growth of 28%. Here the first is Volkswagen Group with €70.7 billion, the second is Toyota with €66.3 billion.
However, in terms of earnings proportional to revenue, Tesla performed the best. This American electric vehicle company made a profit of 17.8% of revenue, followed by Mercedes-Benz with 13.8%.
The average is 7.3%, although unchanged from the previous year, but it is higher than the 2013-2019 figure of 6.1% achieved in the years before the coronavirus pandemic that devastated the sector.
At the same time, looking at this figure, it is clear that the circle of the largest automakers is increasingly torn apart. In the strongest group of five companies, average earnings proportional to revenue jumped from 9.1% a year earlier to 11.7%. In the group of the weaker five, earnings proportional to revenue, which is considered one of the main indicators of profitability, fell from 5.5% to 3.8%.
Sales grew the most in the number one market: in China in the third quarter by 11% year. German manufacturers have been extremely successful in this market, selling 28% more vehicles than a year earlier.
The US market, on the other hand, grew by only one percent, although German manufacturers also saw a sharp increase of 18%. Sales in Western Europe fell by 3%, and German automakers also recorded a 3% drop in this market.
In the most important markets, the general population is suffering from a significant decline in their purchasing power, meaning that there will be fewer people who can afford to buy a new car.
This could increase price competition, which could further reduce revenue-proportional margins, at least for non-luxury car manufacturers. If automakers can make the product attractive and keep the supply limited, then there is no need for a discount, but this is possible in the premium rather than the bulk market segment.