According to management consultancy AlixPartners, Chinese car manufacturers will become export world champions for the first time this year. Already in the 1st quarter, China with 1.07 million cars exported overtook Japan with 954,000 cars, followed by Germany (840,000), South Korea (750,000) and Mexico (741,000).
As a manufacturing location, market and exporter, China is “well on its way to becoming an auto powerhouse,” said Alix industry expert Fabian Piontek. The Chinese are also entering the global market with e-vehicles and are increasingly putting pressure on European car manufacturers in their home markets.
The global car market is growing again, but much more slowly than expected. The driving force is the US. “In the long term, sales in Europe will be more than 15 percent below pre-Covid values,” says the Alix study.
Record profits are coming to an end
“The era of record profits by German automakers is coming to an end,” the industry experts write. In a cooling global market with increasing competition, the pressure on profit margins is increasing. Battery costs, which fell too slowly, dampened the faster rise in EV sales over the next three to five years. This prevents cost advantages due to large quantities.
Raw material costs have also risen again due to increasing demand from China and will “not return to pre-Covid levels”. In addition, there would be rising capital costs as a result of the interest rate turnaround.
Alix restructuring expert Jens Haas expects “further consolidation in the supply industry”. Debt is currently at record levels, while capital costs and cash requirements for operations and investments are rising. The chance of price increases by car manufacturers is small.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
