These "old guns" are making money in a muffled voice
Will the "old guns" who mainly manufacture traditional fuel vehicles become the "next Nokia"?
If you take a closer look at data such as global sales volume, profitability, etc., you tend to come to different conclusions. Traditional automobile manufacturing giants, including Volkswagen, Toyota, Mercedes-Benz, BMW, etc., still maintain strong system capabilities in the transformation of the industry, not only global sales maintain an upward trend, but also the ability to make money is still online
Image source: Volkswagen China
In 2023, Volkswagen China delivered 3.236 million vehicles, a year-on-year increase of 1.6%. For every 10 cars sold in China, one is a Volkswagen. In the high-end market, the Audi brand sales grew strongly, with a total of 729,000 vehicles delivered, up 13.5% year-on-year, the highest growth rate among BBA luxury brands, of which the high-end model Audi A6L delivered 183,000 units, which is the highest sales and highest increase in Audi's model.
In 2023, although Mercedes-Benz's sales in China will be the same as in 2022, its high-end luxury matrix such as the Maybach brand and G-class off-road vehicles will achieve annual growth of 21% and 22% respectively, helping Mercedes-Benz to once again rank first in the high-end luxury car market of more than 1 million and 1.5 million.
In 2023, Toyota will still be one of the world's largest automakers, with annual sales of an astonishing 10.56 million units, accounting for 9% of the global market share, of which, in the first half of 2023 alone, Toyota's net profit will increase by 121.1% year-on-year, making a huge profit of 2,589.4 billion yen (about 129 billion yuan), even if the profits of the ten Chinese auto brands combined, it is less than one-third of Toyota.
From a rational point of view, at a time when new energy vehicles have generally failed to achieve profitability, those old automobile companies still maintain a strong earning capacity by virtue of their advantages in the field of fuel vehicles in the past. Now, these automakers are turning to electrification, and the future market competition pattern will be more complex.
Foreign-funded car companies are still "making money quietly"
The rising sales of domestic automakers have not led to a general increase in profits, and those foreign-funded companies do not seem to have affected their profits.
In the 2023 Fortune 500, there are 23 car companies on the list, with Volkswagen in first place and Toyota in second. Among the top 10 auto companies, SAIC is the only Chinese company (ranked 9th). At the same time, in the global car sales list in 2023, Toyota topped the list with 10.64 million units, achieving the "fourth consecutive championship". This year, BYD broke into the top 10 and ranked ninth, which is also the first time that a Chinese car has entered the top 10.
From the perspective of earning power, Toyota's net profit in the first half of fiscal year 2024 (April-September 2023) is about 129 billion yuan. This is an extremely exaggerated figure. Taking the domestic leading automobile brands as an example, BYD's net profit in the first half of the year was 10.95 billion yuan, Great Wall was 1.361 billion yuan, Geely was 1.57 billion yuan, Changan was 7.653 billion yuan, Chery was 619 million yuan, GAC was 2.966 billion yuan, SAIC was 7.09 billion yuan, Dongfeng was 1.382 billion yuan, Ideal was 3.244 billion yuan, and JAC was 155 million yuan. In other words, the total net profit of the ten independent car companies is only 36.99 billion yuan, less than one-third of Toyota.
According to Volkswagen's third-quarter 2023 report, its third-quarter revenue was 78.8 billion euros, up 12% year-on-year, higher than the market expectation of 76.1 billion euros, and its operating profit was 4.9 billion euros, up about 14% year-on-year. Volkswagen said it expects operating profit in 2023 to be on par with last year's 22.5 billion euros. Volkswagen Group (China) Chairman and CEO Braid said at a recent media conference that some pure electric vehicle manufacturers currently have the concept of "sales are more important than profits", but for Volkswagen China, healthy profitability is more important than market share, and only through profitability can we continue to make investments for the future, and Volkswagen China will not compete for market share regardless of cost.
Mercedes-Benz's earning power has also not been affected, and in the first three quarters of 2023, Mercedes-Benz's net profit exceeded 15.3 billion euros, a year-on-year increase of nearly 2%. "As a luxury brand, we will not blindly pursue short-term sales figures, we will pay more attention to the quality of development, hope to create long-term value for customers and shareholders, structurally improve profitability, and form a positive cycle development model. Oliver Britz, executive vice president of sales at Mercedes-Benz Sales & Service Co., Ltd., told China News Weekly, "No matter what era it is, customers always need a good car, a good Mercedes-Benz car, including safety performance, manufacturing technology, intelligent technology and brand experience, etc., and this is where the long-term advantages and brand strength of Mercedes-Benz under the systematic competitiveness lies." ”
Even for some brands that have become niche in the Chinese market, or even withdrawn from the Chinese market, their parent company's ability to make money has not diminished at all. According to the financial report of the multinational automotive company Stellantis Group for the first half of 2023, the group's net revenue in the first half of the year reached 98.4 billion euros, an increase of 12% year-on-year, adjusted operating profit reached 14.1 billion euros, an increase of 11% year-on-year, net profit reached 10.9 billion euros, an increase of 37% compared to the first half of 2022, and industrial free cash flow reached 8.7 billion euros, an increase of 3.3 billion euros year-on-year.
The "old guns" in the automobile industry are still the "old guns", and they are not soft at all when it comes to making money.
The scramble intensifies
Fuel vehicles can be profitable, but the market size is shrinking, and new energy vehicles have achieved rapid growth, but most of them are losing money. This is also the reason why many traditional automobile companies still stick to the base of fuel vehicles.
Of course, the transformation of multinational car companies to electrification is also accelerating.
"The deep traditional accumulation will not be our disadvantage, on the contrary, it will further promote us to accelerate the transformation towards new energy vehicles. "We are promoting the hybrid transformation of gasoline vehicles, accelerating the electrification offensive, and creating new models exclusive to the Chinese market." By 2030, we will offer more than 30 BEVs. ”
In the gasoline-powered vehicle market, the Volkswagen Group's market share further expanded to 21 percent, an increase of about 1.3 percentage points compared to the previous year. "We are the only mature international automaker in the Chinese market that has maintained a large volume and achieved year-on-year growth. According to Barryde, combustion engine vehicles remain an important pillar of his business. At the same time, Volkswagen's R&D speed has also pressed the fast-forward button, shortening the R&D cycle by 30%, and the first electric vehicle platform dedicated to the Chinese market is ready to launch.
"In 2024, with the launch of a number of products, including the all-new all-electric G-Class off-road vehicle, the all-new Maybach EQS all-electric SUV, the all-new CLE family, and the next-generation EQA and EQB SUVs," said Duan Jianjun, President and CEO of Beijing Mercedes-Benz Sales & Service Co., Ltd. "We will fully meet the diverse needs of Chinese customers in sustainable luxury mobility with high-quality products and customer experience, and continue to participate in the transformation and upgrading of China's automotive industry." ”
Oliver Britz also said, "In the long term, Mercedes-Benz's strategy is very clear: by 2030, Mercedes-Benz passenger cars will be fully electrified in markets where conditions permit. Mercedes-Benz is also the first group of car companies to clearly put forward the goal of 'full electric'. We will move forward with this strategy in an orderly manner. ”
In recent years, China's auto companies are rapidly gaining volume and scale, but they have not yet fully established a qualitative advantage. With the acceleration of the transformation of traditional automobile manufacturing giants with "deep pockets", the automobile market will also usher in a new round of reshuffle.
Author: Liu Shanshan
Editor: Zheng Yu