Despite the pandemic: car manufacturers earn better than ever before

As of: 11/29/2021 11:07 a.m.

Regardless of the problems with delivery bottlenecks, profits are gushing at the big automakers – which also has to do with their model policy. Many suppliers, on the other hand, are in a crisis.

According to a study by the auditing and consulting firm Ernst & Young (EY), the 16 world’s largest car companies have achieved record profits despite a lack of chips and the consequences of a pandemic. In the past quarter, the operating results increased year-on-year by eleven percent to a total of 23.1 billion – a level never before reached.

Chips for expensive cars

The companies have so far “survived the semiconductor crisis remarkably well,” according to the EY experts. The scarce chips are primarily built into “high-priced, high-margin vehicles”. In addition, manufacturers have been giving fewer discounts for a few months now because demand has exceeded supply. “The industry has not seen such good price enforcement for a very long time,” said EY industry expert Constantin Gall. “Even if the semiconductor crisis eases in the course of the coming year, prices are likely to stay up for a while.”

Nevertheless, there is no party mood among the car manufacturers: “On the contrary,” said EY partner Peter Fuß. Even companies that previously had sufficient semiconductors are likely to increasingly feel the effects of material shortages and price increases. Corona could lead to further production downtimes and logistics disruptions.

Suppliers suffer

“In addition, the current situation presents the suppliers with enormous, sometimes existential, difficulties – and ultimately manufacturers and suppliers are in the same boat, the manufacturers are dependent on solvent suppliers,” said Fuß.

According to a study by the management consultancy PwC, only 24 percent of their suppliers are financially sound. 42 percent, on the other hand, are “now in a financially tense situation,” said PwC. The chip crisis is slowing down your transformation to electromobility. The consultants examined 494 suppliers from 35 countries.

Burden of energy prices

In the summer, carmakers and suppliers benefited from catch-up effects and the increasing demand for electric cars, said PwC industry expert Thomas Steinberger. In the meantime, the automakers have ramped up their orders out of concern about the supply chains.

“However, these are currently not being accessed because the car manufacturers are only able to deliver vehicles with a delay due to the lack of chips,” explained Steinberger. Now suppliers are struggling with excessive inventories and rising raw material and energy prices.

Exports and imports collapse

The bottlenecks have resulted in lower sales. According to the Federal Statistical Office, cars worth 23.1 billion euros were exported between July and September. That was 17.2 percent less than in the same period of the previous year. However, car imports fell even more sharply compared to the previous year – by almost 30 percent to 11.2 billion euros.

The decrease is due to vehicles with internal combustion engines. In the case of purely electric vehicles, on the other hand, strong growth was recorded again: From July to September, 69,800 purely electric vehicles worth 2.9 billion euros were exported, which is an increase of almost 27 percent compared to the same period in the previous year. The increase in imports was even greater: with 59,700 electric vehicles for 1.7 billion euros, the value rose by more than 58 percent.

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