have little to celebrate after years of record breaking news. As soon as the companies that are so important to the German economy have to invest billions in electric drives, battery technology and networking in their cars, reliable markets will break away for a long time.
Volkswagen and Daimler reported further declines in car sales around the globe for their core brands VW and Mercedes-Benz on Wednesday. Experts are worried thatdrastically decreases this year. In China, formerly a growth guarantor, after more than 20 years of boom there has been dreariness for a full twelve months. The car buyers are still very sensitive to the customs dispute between the US and Beijing, and the economy in the Middle Kingdom is not growing as fast as before. Chinese consumers are waiting for expensive purchases. Even the VAT cut in early April has not helped the market to its feet.
Dudenhöffer: Auto industry facing "deep crisis"
The two industry associations China Passenger Car Associaton (PCA) and China Association of Automobile Manufacturers (CAAM) continued to report significantly lower sales to customers and lower sales to retailers in May. The market in Europe also does not want to jump right after new emissions measurement procedures were introduced last autumn. And in the US – in addition to the tariff discussion – higher interest rates are threatening to strangle the demand of motorists who often buy their money.With its core brand, after five months with around 2.46 million cars delivered worldwide, it is five percent below the previous year's level. So far, Mercedes-Benz has also sold just under 5 percent fewer cars, with Audi accounting for nearly 6 percent less. has yet to submit the figures for May, but had until April, a small increase of almost one percent recorded in the house brand.
For automotive expert Ferdinand Dudenhöffer, industry worldwide is facing a deep crisis. According to a recently published study by the research institute CAR at the University of Duisburg-Essen, global sales of new cars could drop by more than five percent to 79.5 million units in the current year. Such a big slump had not even been observed after the 2008 financial crisis. Dudenhöffer sees the customs wars and sanctions instigated by US President Donald Trump as the most important reason. The study anticipates a decline of around ten percent in China for the full year 2019. In Western Europe, the minus would be moderate with three percent.
German carmaker facing mountain of problems
China has thus recently accounted for more than a quarter of global car production. Now, according to Dudenhöffer, the country has overcapacity to shoulder, which it estimates at least six million vehicles annually. It is true that the various problems affect German manufacturers and suppliers in different ways. At Mercedes-Benz, for example, currently burden according to company information, especially model changes. In the second half of the year it should then go uphill again.
Not least, the conversion of diesel vehicles cost a lot of money. At Audi, the new exhaust test standard WLTP caused the most serious problems because many models were not available. VW is affected by the supply of mass-compatible cars relatively strong by the restraint in China. BMW is currently doing well there with new models, but due to the market turbulence in Europe, the company throttled production. In addition, the Munich have made the only one of the ranks of German manufacturers a provision for a possible antitrust penalty of the EU – and in the billions.
But as different as the problems may be in detail, the effect is often the same: save, save, save. Daimler does not want to talk about the change of boss so right with concrete details on the austerity program, the new CEO Ola Källenius but will probably soon have to pull the reins. Ex-boss Dieter Zetsche gave him on the way that everything must be put to the test. At BMW, a total of 12 billion euros will be saved over the next four years. At Volkswagen CEO Herbert Diess trumps above all the low-yield core brand VW and the recently weakening group subsidiary Audi on more return. In addition to the ongoing austerity program of VW, which mainly affects production, another 4,000 jobs in the administration are to be canceled. And the carmakers are not alone, with the suppliers always hanging behind. For the listed companies, hardly any of them came around profit warnings in the past twelve months, as business was worse off than planned.