The European automotive sector appears to be entering a season of skinny cowsaccording to This group of companies has demonstrated throughout the year. China has become an obstacle to sales, limiting corporate profits, as is the case with luxury clothing brands with their results that have not pleased the market. And analysts, given the moment the sector is going through, profit estimates were reduced by an average of 26% for the group of automobile companies on the Old Continent for 2024 and 2025, compared to their expectations at the start of the current year. Everyone is waiting for the results they present for this last quarter.
In January, the expert consensus collected by FactSet predicted that the group would manage to obtain 66.794 million euros in profits by 2024. But, in Latest consensus revision, forecasts are limited to 47.960 million euros, or 28% less. But the outlook for next year 2025 is not positive either, since the consensus has limited its forecasts by 24% since the start of 2024. The market consensus predicts that the group will obtain 53 billion euros, against the 69 .8 billion expected at the start. year.
Companies in this sector are aware of the future of their revenues and profits, which is why in September the sector experienced a perfect storm of profit warnings, due to the change in forecasts for its Volkswagen, Mercedes-Benz, BMW, Stellantis and Aston Martin businesses, which caused the stock price of this sector to fall. The collapse of sales in China has unexpectedly affected these companies, while increased competition with their economical electric vehicles This leaves automakers in a complicated situation.
Stellantis is the company that saw its earnings estimates decline the most during the year, Experts have halved the auto brand conglomerate’s expected profits this year. At the start of 2024, experts expected the sum to rise to 16.7 billion euros, today down 50%, and they estimate that they will get 8.4 billion in profits. And by 2025, the decline is 44%, from expectations of 16.921 million to 9.394 million.
From Bankinter, after profit warning carried out by the company at the end of September, they underline the significant nature of this change in expectations, since “unlike other competitors, Stellantis has almost no exposure to China. Asia represents only 1% of its total sales. This is why this aggressive cutting of the guides is particularly surprising,” on the other hand, ” “The region where it faces the greatest difficulties is the United States.”
Furthermore, they claim that “Stellantis is the manufacturer that has invested the most resources in the development of affordable electric vehicles, which are most affected by growing competition from Chinese manufacturers arriving in Europe, 35% of their total sales. Without forgetting the slowdown in sales of this type of vehicle due to the absence of an adequate charging network or doubts about the autonomy of the batteries. » From there, the entity changed its recommendation from direct purchase to sale, taking into account the sector’s own weaknesses.
The second company that most reduces its profit estimates in 2024 is Renault, since analysts have reduced their forecasts for this company by 34%, from 3,527 million euros to 2,310 million, despite the fact that its results for the last quarter were not negative. From JP Morgan’s perspective, it was “a good quarter, with a 7% increase in revenue.” “The solid order book at the end of September and the upcoming launches should allow a sequential acceleration of activity,” they defend to the analysis house.
In the case of Porsche and Continental, the forecast declines are greater than 27%. While Volkswagen, Mercedes-Benz and BMW are seeing a decline of around 20%. Luxury companies have found an unexpected obstacle in Asian competition. Despite the confidence they place in their high-end products, they are not enough to compete with the innovations brought by Chinese electric cars to the market.
Ferrari, the only one that increases
Only Ferrari manages to be an exception for the experts and is saved by the downward revision of its profit forecasts. Analysts give the mark Prancing horse A 5% increase in its profit estimatesfrom 1,390 million euros up to 1,460 million. This would be a new record for the company, since it will manage to exceed its historic peak reached last year: 1,000 million euros in profits. The increase in prices of its cars and their greater customization are the main reasons that pushed this company’s profits in the first half of the year, which increased by 21% in this period compared to the same quarter of 2023.
On the stock market, a large number of these companies have already seen the consequences of experts’ predictions on their prices. Within the Stoxx 600, the sector of companies producing automobiles and their spare parts is the most bearish of the entire continental benchmark. During the year, this group of companies fell by 10.6%, which even the increase of the 48% progression that Ferrari maintains so far in 2024 fails to put the group under a positive day.
In the middle of the earnings season, Renault, Mercedes-Benz and Porsche have already presented their results for the third quarter of this year, but analysts will wait for the companies that still have to report, these are the following companies: Volkswagen (October 30), Stellantis (October 31), Ferrari (November 5), BMW (November 6) and Continental (November 11).
