Declining Revenues for Volkswagen, BMW, and Mercedes: German Automakers Lag Behind Global Rivals

The German automotive industry is facing significant challenges, as highlighted by a recent analysis that reveals Volkswagen, BMW, and Mercedes-Benz have underperformed compared to many of their global competitors. According to data from the consulting firm EY, which evaluated the financial results of 16 leading manufacturers worldwide, Germany's automotive giants experienced a difficult year.

In 2024, while Volkswagen reported a modest revenue increase, BMW and Mercedes-Benz saw declines in their business activities. Overall, the revenues for these three manufacturers fell by 2.8%. In contrast, the total revenue of all examined companies rose by 1.6%, exceeding two trillion euros. Although the German trio generated nearly 613 billion euros in revenue, accounting for about 30% of the total, their share has decreased compared to the previous year.

When it comes to operational profit, VW, BMW, and Mercedes significantly trailed behind most other manufacturers. Japanese and US automakers, in particular, have shown stronger performance. According to EY market analyst Constantin Gall, the landscape has shifted for German manufacturers. He noted that weak sales, coupled with substantial investments in electric mobility that have not yet yielded the expected returns, contribute to their struggles.

Gall also pointed to internal challenges such as costly software issues, restructuring expenses, and product recalls that are affecting profitability. He explained that while premium manufacturers managed to maintain high prices in 2023, the economic climate and global conflicts have led to a reduction in demand, compelling companies to engage in more aggressive price competition.

The automotive sector is currently grappling with a downturn, primarily due to lower demand for electric vehicles amid a sluggish economy. Several manufacturers and suppliers have already announced cost-cutting measures, including job reductions. The situation is expected to worsen due to trade tensions with the United States, as US President Donald Trump recently implemented a 25% tariff on all auto imports, which poses a significant threat to German manufacturers, who rely heavily on the US market as their largest export destination.

Looking ahead, Gall does not foresee a turnaround in 2025 for sales, revenue, or profit margins. He indicated that the economic stagnation in Europe, the impact of newly imposed tariffs in the US, and intense price competition in China will continue to challenge the industry. German automakers must focus on strategic realignment and core brand development, as austerity measures can only serve as a means to finance their transformation.

In conclusion, the German automotive industry must navigate a complex landscape filled with competitive pressures and internal challenges. A robust response is necessary to adapt to the evolving market dynamics and secure future growth.