automobile manufacturers in Europe and Asia are warning of a challenging year due to rising costs and declining demand for electric vehicles that affect profits.
Mercedes-Benz Group AG announced Wednesday that it will sell internal combustion cars for longer than expected in the face of disappointing sales of EV. Toyota Motor Corp.which expects a one-fifth decline in operating income this fiscal year, is betting on hybrids to counteract lower production. BMW AGeven though it is doing better with electric cars, pointed to problems including higher manufacturing expenses.
Persistent inflation, moderate economic growth in much of Europe and a prolonged recovery in Chinawhere excessive discounts on electric cars are hurting manufacturers, are adding to the industry’s woes.
“The price war in China is getting tougher every day“, said Yoichi Miyazakifinancial director of toyota. “We will have to continue resisting for several years until we have more vehicles of battery to offer”.
Mercedes reported a drop in profits in April due to model changes and weak demand for EVwith Volkswagen AG and Stellantis NV also indicating slow starts to the year.
However, most auto industry companies confirmed their full-year forecasts, with German parts maker Continental AG announcing on Wednesday that it expects profits to improve in the second half due to price increases and cost reductions. Sales of electric cars bmw rose 28% in the first quarter after the German brand presented a series of models powered by batteries which look very similar to their gasoline models.
But many automakers are feeling the pain of the slowdown of electric-powered vehicles after governments ended lucrative subsidies for technology, making EV, already more expensive, are even less attractive. Gaps in charging infrastructure also continue to deter potential buyers.
“Some of our customers have delayed product launches in general, also in the new area of battery cars,” he said. Katja Garcia VilaCFO of Continentalto Bloomberg in a telephone interview. “That caused delays in ramping up our production.”
Ola Källeniusexecutive director of Mercedestold shareholders Wednesday that the sedan maker Classes will continue to produce internal combustion vehicles and hybrids “well into the 2030s” if demand allows.
The largest vehicles with internal combustion engines still generate the highest profits, with Ferrari NV and Porsche AG among those that boast the highest returns. And with China Without eliminating sales of new internal combustion engines until 2060, luxury automakers still see potential for their legacy products in the world’s largest automotive market.
Although the shift toward electric vehicles risks going off course, automakers are not making a complete change of direction.
toyota said it is committed to electric cars for the long term and will invest approximately $3.2 billion in plans to decarbonize and develop next-generation software.
Ferrariwhich on Tuesday reported disappointing earnings and did not raise its forecast, is building a factory in Italy to make cars hybrid and electric which will be ready next month. So much bmw as Mercedes They plan to introduce a new generation of electric-powered vehicles with improved technology by the middle of the decade.
Demand for EV “It has decreased a little, but it is not the end of the world,” he said. Thomas Schäferwho leads the eponymous brand of Volkswagenon Wednesday at a conference organized by the Financial Times in London.
©2024 Bloomberg
