The famous credit rating agency, Moody’s, published a new report that reasserts the negative performance suffered by different European car manufacturers like Volkswagen, Stellantis, and BMW for this year. Low estimates for sales, profitability and cash-flow characterize the outlook for the whole 2024. According to the rating agency, a return to positive performance could be reached in the second half of 2025.
The factors contributing to these poor results are diverse: we are mainly talking about low post-pandemic demand, but there has also been a slow-down of production, both in Europe and worldwide, as well as an increasingly fierce competition in the Chinese market. The electric vehicle (EV) sector is particularly crucial: while Chinese firms are able to produce faster and at a lower cost, European producers struggle to keep up with EV output; important now to comply with the EU’s Green Transition objectives.
One of the most severe cases is that of Stellantis: the multinational holding company obtained 5.6 billion euros in net profits during the first semester of 2024, almost 50% less than in 2023, being the European producer with the worst results in the stock market. The rest of the so-called «Big Five» (Mercedes-Benz, Renault, Volkswagen and BMW) were also part of a downward trend in the market, although with less concerning results.
The worrying condition of the European automotive industry is part of a bigger set of issues related to productivity and global competitiveness which have been lingering on the Old Continent for years and which concern European policy-makers and businessmen alike in the face of the rapidly evolving globalized world.
Author: Luis Cabezas
Photo: Freepik