The German automotive industry has primarily lost market share in China, and it is a very large market, says SEB's euro economist Pia Fromlet.
Since Volkswagen opened its books on July 24, the news has been rolling in continuously. The car giant, which recently announced plans to cut up to 100,000 jobs, reported a profit that shrank more than expected and lowered its full-year forecast.
Shortly thereafter, both Audi and Mercedes-Benz lowered their forecasts for passenger car sales for the full year.
China has gained ground. The German car industry jumped on the electrification bandwagon too late, says Fromlet.
On Thursday, BMW also laid its cards on the table - the carmaker reported a 35 percent profit increase. According to Bloomberg, the company is expected to reduce its workforce by around 8,000 positions.
“Feeling throughout Europe”
The gloomy news is creating ripples.
The car industry is the heart of the German economy. Above all, there is a psychological effect. You can feel it when things are going badly - it makes a lot of headlines, says Pia Fromlet.
German manufacturers' shares have fallen 20-35 percent so far this year. Smaller companies in the country that are subcontractors to the industry are being affected. Sweden, which has Germany as its largest export market, is also being hit by the downturn.
Countries like the Czech Republic, Slovakia and France are also dependent on German industry. This is felt throughout Europe.
But the car crisis doesn't just apply to German brands.
Stellantis, which owns Fiat, Citroën and Peugeot, also reported a profit that was lower than expected and the share fell on the Milan Stock Exchange. The share is down almost 50 percent so far this year.
Ferrari in the outer lane
One of the few bright spots during the quarter was luxury brand Ferrari, which raised its forecast and reported a sales boost. In May, the company launched the controversial Luce electric car model, which was initially mocked for its unusual design, created by former Apple designer Jony Ive.
But Ferrari already reached its full-year sales target for Luce in July. One of the reasons for the success is precisely high demand from China.
European car companies have invested a lot in research and development, and if you want to be a little optimistic, they might find new models that are popular, especially in the electric car market, says Fromlet.
