It used to be more

This is how much manufacturers earn per vehicle

15.05.2024 06:00

Customers pay a lot of money for cars. Nevertheless, manufacturers are not satisfied: The transition to e-mobility is putting pressure on the automotive industry. The extremely high profit margins of late are suffering as a result.

After years of record margins, car manufacturers' profits are falling back to normal. The average EBIT margin for the ten most important international players in the industry was 7.1% in the first quarter. This is the lowest figure for three years, according to the Center of Automotive Management (CAM) in Bergisch Gladbach.

Having recently been able to produce mainly high-margin models amid high demand and simultaneous supply bottlenecks, manufacturers are now suffering from high interest rates and geopolitical uncertainties.

BMW and Mercedes in the lead
The German premium manufacturers BMW and Mercedes remain the most profitable carmakers in the first quarter with operating returns of around 11 percent. Toyota, the largest volume manufacturer, follows with 10 percent. General Motors was also able to increase its margin to 8.7 percent.

The Volkswagen Group was in the midfield with a total return of 6.1 percent, just ahead of Hyundai (5.8 percent) and Honda (5.6 percent). The electric car manufacturers Tesla (5.5 percent) and BYD (4.6 percent) suffered from the weakening market ramp-up and the price war in some markets.

Looking only at the core business, the average profit per vehicle fell to €2,253 - a drop of 19% compared to the full year 2023. Here, too, the German premium manufacturers performed better than the market as a whole, with Mercedes and BMW each achieving a good €4,000. In the year as a whole, however, the figure was still €5000 and €7000 respectively.

Expert tip for car manufacturers
According to CAM Director Stefan Bratzel, the industry is in a dilemma: on the one hand, they have to offer increasingly low-emission and electric vehicles, but on the other hand, they are not earning any money with them. Bratzel advises German manufacturers in particular to further reduce costs along the e-car value chain and at the same time to focus on innovation in order to be able to justify the higher list prices to customers in the face of new competitors from China. "German car manufacturers in particular must be at least as much more innovative and better as they are more expensive."

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