The global automotive sector is experiencing another disastrous day on the stock market. This Monday there was a sort of “perfect storm” amid the weakness of the classics of the sector, which leads to sharp declines. THE poor business forecast launched since Friday by certain major brands have raised doubts among investors. The cars have not yet started after the pandemic tunnel and on roads whose new “curves” follow the route of China.
The headlines are once again for the German giant Volkswagen. The iconic German manufacturer has a string of bad news and after the blow from its announcement of possible national factory closures, the profit warning (profit warning) that he launched last Friday, the second in three months, makes him lose more than 4% on the German Stock Exchange this Monday.
The German automaker cut its revenue, profit and cash flow forecasts on Friday due to falling demand for its cars. The company plans to deliver fewer vehicles this year than in 2023, its fourth annual sales decline in five years. The warning underlines the scale of the crisis for Volkswagen, which has failed to make the transition to electric vehicles and has lost relevance in China, where its VW, Audi and Porsche brands are losing market share. In Europe, CEO Oliver Blume faces new competitors, such as China’s BYD, as well as conflict with unions over possible job cuts and the aforementioned unprecedented factory closures.
The three main German car manufacturers – Volkswagen, Mercedes-Benz Group and BMW – have already launched profit warnings reap your benefits this month. He Crash in China and the growing competition from electric vehicle manufacturerslike Tesla, are forcing automakers to reduce their margins. Declining consumer confidence is undermining demand for combustion engine cars.
Volkswagen has dominated sales of gasoline cars in China, but has been unable to keep pace with the rapid transition to electric vehicles in the largest auto market. There, local competitors such as BYD have taken the lead with innovative and affordable models. To try to turn the situation around, VW is closing factories, establishing alliances with local manufacturers such as Xpeng Inc. and promoting a new brand of electric vehicles aimed at younger buyers.
VW-owned premium brands such as Audi and Porsche have been the automaker’s biggest profit generator in recent years, but they have started to struggle in the sector’s key market. The 911 maker’s sales in China plunged 33% in the first half as luxury buyers held back.
“Volkswagen’s benefits of scale in China have probably peaked as local customers begin to favor domestic brands,” he explains. Bloomberg Matthias Schmidt, an independent auto analyst based near Hamburg, adds that the “brutal” price war there is hurting VW’s bottom line.
As the transition to electric vehicles is in full swing in China, Europe is falling behind. Sales slowed after countries including Germany and Sweden reduced or removed incentives, catching VW and European peers Stellantis and Renault off guard. Chinese electric vehicle manufacturers, such as BYD And M.G. (owned by VW partner SAIC Motor), have entered the ring with low-cost offers.
Shares of Stellantis and Aston Martin also fell sharply after the automakers cut their forecasts on Monday, adding to the pain of the European auto industry.
In the case of Stellantisthe conglomerate which brings together brands such as Peugeot, Citroën, Opel, Fiat or Chrysler, significantly reduced its profit margin forecast for the year, citing plans to cut production and spend more on promotional incentives in a slowing and more competitive auto market. The adjusted operating profit margin will narrow to between 5.5% and 7% this year, down from previous forecasts by a double-digit percentage, the automaker said in a statement Monday. Stellantis also now expects industrial free cash flow to be between negative €5 billion ($5.6 billion) and negative €10 billion, down from a previous forecast of positive cash generation. Stellantis shares fall more than 8% in Paris, reaching its intraday low since December 2022.
Stellantis now promises more aggressive actions to realign the vehicle supply, with the objective of not exceeding 330,000 stock units at dealerships by the end of the year, instead of the first quarter of 2025. The manufacturer aims to achieve this by manufacturing 200,000 fewer vehicles during the year. second half – double the reduction initially planned – and an increase in incentive spending.
For their part, the British Aston Martin lowered its forecast for the year, citing supply chain disruption and weak demand in China. Actions fell up to 12% at the start of the session in London, the biggest drop since May 1, with losses this year of 37%.
The luxury automaker expects Annual sales will now be around 1,000 vehicles lower than beforeas announced this Monday. Adjusted earnings before interest, taxes, depreciation and amortization will be slightly lower than last year, and the automaker no longer expects positive free cash flow in the second half of the year.
Another sharp drop occurred this morning from Japan. Shares of giant Toyota fell 7.6% on the Japanese stock market. As the Japanese stock market was closed on Friday, it emerged that Toyota sales had fallen again after declines in Japan and China ended a short-lived recovery, while production was disrupted by scandals internal and recalls abroad.
Global production, including that of subsidiaries Daihatsu Motor and Hino Motors, fell 12.6 percent in August from a year earlier, to 808,023 units, the company reported Friday. Global sales fell 3.7% year-on-year after an increase of 0.7% in July. Toyota sales fell more than 9% in Japan, due to the delayed impact of recent regulatory scandals involving falsified vehicle safety certifications, which forced several of the country’s largest automakers to suspend production of models concerned.
Its gasoline-electric hybrid cars have regained popularity as demand for electric vehicles stabilizes, but a global decline in new car sales and intense competition in China are weighing on the world’s largest automaker.
