Two German car brands earn the most

For years, margins on cars were astronomically high, and now it looks like a return to reality is coming.

On average, the operating margin for the ten most important international representatives of the industry in the first quarter was 7.1 percent.

This is the lowest value in three years, as determined by the Center for Automotive Management (CAM) in Bergisch Gladbach.

After manufacturers were recently able to produce high-margin models due to high demand and supply constraints, times are now changing due to high interest rates on capital and geopolitical uncertainties.

German premium makers BMW and Mercedes remained the most profitable automakers in the first quarter with an operating return of around 11 percent. It is followed by Toyota with 10 percent. General Motors also managed to increase its margin to 8.7 percent.

The Volkswagen gig was in the middle with a total return of 6.1 percent, just ahead of Hyundai (5.8 percent) and Honda (5.6 percent).

Electric car makers Tesla (5.5 percent) and BYD (4.6 percent) suffered from weak market growth and a price war in some markets (mostly China). If you look only at the core business, the average profit per vehicle fell to €2253 – a 19 percent drop compared to 2023. Mercedes and BMW go above average, with an average profit per vehicle of €4000.

CAM head Stefan Bratzel claims that the industry is at a turning point: on the one hand, it has to offer more and more low-emission vehicles and electric vehicles, but on the other hand, there is no profit to be made with them.

In particular, Bratzel advises German manufacturers to further reduce costs along the electric car value chain by focusing on innovation in order to justify higher list prices to buyers compared to new Chinese competitors. /Telegraph/