After seemingly endless years of success, a violent storm is gathering over the German car industry. It could be a perfect storm because the reasons are not just homemade. Something is brewing in Germany, and a key industry is showing weaknesses. At Audi, the signs are on alarm. In Neckarsulm 2018 ran only 186.000 new cars off the line, with a capacity of 300.000. And Ingolstadt is also only busy at 80%. And hopes for the production of the VW Passat.
The news runs across the industry. You can choose any. At Opel, every 3 has been sold to the PSA Group since its sale. Job dismantled, now are more 500 employees to go in Kaiserslautern and Eisenach. Ford is canceling in Germany 5.000 postsBosch is not just building in Bamberg Jobs and Daimler shocks with one billion loss and sends a profit warning to the stock market for the second time.
The problems of the commercial dispute
A German problem and homemade? The exhaust gas scandal is far from over, the political uncertainties surrounding possible driving bans unsettle private buyers. But there is more, and the gathering storm is global. As an example, Volvo can apply. The Swedes have a young range of models and they offer exactly what customers want. SUVs in all classes and sizes, the buyers reward the offer. And at first glance shows the current Half-Year Report good numbers. A record in sales and vehicles sold. With an increase of 7,3% Volvo is growing faster than the market, but the return on sales has collapsed. From 6,4% to 4,2% compared to first half 2018. With falling tendency, because in the 2. Q3 2019 continued to lower its yield to just 3,9%.
Gothenburg has been driving a rigid austerity program since the beginning of the year. On owner Li Shufu one can not hope, the main shareholder pawned just recently bought his shares in AB Volvo for a 400 million euro loan. Volvo has become a victim of the trade conflict between China and the United States. The global production strategy of the Gothenburg automakers is just waste. Instead of delivering vehicles from China to the USA and vice versa, more Volvos from Chinese plants are entering the European market. The production changeover and transport routes nibble on the yield. Swedish-made vehicles are more expensive to manufacture and are now being exported to North America instead of Chinese vehicles.
China will not save the car market this time
A few years ago, the problems would have been manageable, because there would have been a solution. China was the magic word for decades. The largest market in the world, with almost endless possibilities. The automakers, especially the Germans, could reliably rely on the administration in Beijing. If the economy showed weakness, then some parameters were changed and growth was further fueled. That's over, especially as far as cars are concerned. And the reasons are in China, why many local factors can create a perfect storm.
In the first half of the year 2019, almost all automakers active in the Chinese market were able to sell their sales plans for the current year. The spoiled-for-profit Geely Group downgraded its annual targets by 10%, with other manufacturers targeting 30 or 40% of full-year sales targets. Some time ago, the Beijing administration would have stimulated the market, now leaving it largely to the customer's demand. And there are good reasons for that from a Chinese perspective.
Sales of electric cars, despite generous subsidies, not as expected. Although an annual increase in market share is prescribed by regulation, and the Requirements The range and the ability to subsidize are constantly increasing. But the domestic manufacturers, despite a growth of 65% to 575.061 “New Energy Vehicles” in the first half of the year, remained well below the sales targets they had set themselves. Neither BYD, BAIC BJEV nor GAC achieve 40% of their planned sales.
The numbers of the hopefuls are sobering
If you take a closer look at the hopefuls of the Chinese auto industry, then the dilemma is in full glory. Despite billions of subsidies for more than a decade, only very few brands are considered capable of international success. Among them are the electric car providers Nio and Xpeng. Nio delivered 2018 8.101 electric cars, it was 2019 in June 1.092, And this despite the fact that the manufacturer is investing considerable resources in a network of charging stations and representative points of sale. Manufacturer Nio is considered one of the hottest candidates for the leap to Europe and maintains a branch in Munich.
Things are a little better at Xpeng. With Nio, the provider is one of the hopes of the Middle Kingdom, which is most likely to be considered an international success. After 371 electric cars in the year 2018 the numbers climb slowly, but steadily. In June 2019 have been already 2.237 delivered purely electric vehicles. A success, but far below the values hoped for for sustainable mobility in China. And measured by the June sales of Volkswagen, 233.181 vehicles, maximum one footnote in the statistics.
Against this backdrop, Beijing will not save the car market, which turned slightly positive in June but is double-digit negative over the year. Because the government is not interested in a rising sales of burners, it relies on battery-electric drives and hydrogen. Further strengthening this market with subsidies is already time-consuming enough for them. In addition, finally put the long-awaited by Beijing shakeout on. Not on a voluntary basis, as hoped for. But through the brutal reality of a shrinking market. And the government should not be unwelcome.
Market shakeout in China
Small providers like Hawtai and Youngman Due to financial problems, there will not be much time left, both manufacturers were interested in Saab 2011. Qoros also can not fulfill its obligations and struggles with falling demand and empty coffers. And even with the electric car startups, the big dying begins. Changjiang, Enovate, Bordrin, Qiantu, Reech, Singulato, Zhidou and Hanteng are suffering from a shortage of money and will disappear from the market.
Beijing still dreams of half a dozen large, internationally successful providers. A strong export nation for mobility, that is the wish. The truth, however, remains sobering. In the first half of 2019, the international exports to return 4,69% to 487.700 vehicles. Only in electric vehicles, the statistics reads well. The plus of 105% in the export stands however also only for 5.339 cars.
Under-utilized factories worldwide, shrinking profits. The crisis will develop into a perfect storm, the outcome of which nobody knows. A solution for the sale of combustion engines, which are the focus of critics worldwide, will not be found. On the other hand, the question of widespread acceptance of electric cars is not only open in China, but no manufacturer can afford the weakness of not investing. At the same time, the topics of hydrogen, synthetic fuels and tightening emissions standards are still on the agenda. Combined with rapidly advancing digitization, this is an uncomfortable situation for an industry that has been on the sunny side for years. One should prepare for losses as a precaution. Because only the strongest should succeed in surviving the storm.