Stellantis, Tesla and Mercedes suffer from falling sales, high inventories

After a couple of years of record profits, automotive sectormany car manufacturers are now reporting half-year financial results that include declines in both invoices and registrations, and above all,from the point of view of profitability.

The global microchip supply crisis has created an atypical situation for the auto industry, which has been producing fewer cars due to Lack of componentssold its models at ever higher prices, and its profits soared to record highs. However, the car market is returning to normal, with margins and revenues declining.

July is considered the date for companies to publish their half-yearly reports. As for the automobile companies, some of them have already disclosed their data, including Porsche, Mercedes-Benz, Ford, General Motors, Tesla, Stellantis, Nissan or Renault.among other manufacturers.

Although there are still large companies in this sector that publish their semi-annual data.BMW and the group Volkswagen They will do this on August 1st next year – the trend of declining profits and turnover is observed in many companies in the industry.

The reasons vary in some cases depending on the company, although there are some common points, such as the influence of the process reduction of stocks what many companies are doing. After the chip crisis, some firms decided to stock their points of sale with more cars in anticipation of possible new problems in the supply chain and production.

Forced to sell these models in stock, brands are unable to sell their new cars at points of sale, so they have to cut production, and at the same time they are forced to apply discounts to make these models more attractive to stock.

Tesla cuts profits

In the second quarter, the American company Tesla saw its net profit It fell 45% to just under $1.5 billion (€1.37 billion), while its auto revenue also fell 7%, although overall revenue rose 2%.

The quarterly decline is explained by high interest rates, as well as lower registrations (-5%), as well as restructuring costs and lower selling prices of its vehicles.

Stellantis, whose accounts were burdened by a smaller number of registrations and worst sales mixwith lower-margin deliveries. In addition, the company has allocated a lot of financial resources to reduce inventory levels. Production stoppages caused by factories adapting to new-generation models also had an impact.

All this has forced the group he leads Carlos Tavares reduced its half-year profit by 48%, to 5.647 million, and its turnover by 14%, to 85.017 million euros.

Germany’s Mercedes-Benz, for its part, earned just over 6 billion euros between January and June this year, down 20%, on a 4% drop in revenue.

Sales in the car division fell nearly 6% and the star group also made moves to offload the large stocks it had been holding.

Overall, most auto companies that reported their half-year financial results saw their profitability impacted by the economic recovery. discount battleafter several years in which promotions had almost disappeared.

An example is the French company Renault, whose turnover increased by a small 0.4%, but profits fell by 35%. The company recorded an effect of $329 million caused by the decrease in sales due to the promotions reduction of stocks which he accomplished. The company also increased its marketing spending to support the launch of new models it brings to market.

The warehouse problems also affected Japanese company Nissan, which had to apply large discounts to sell these models. The company ended its first financial quarter (April-June) with a 73% drop in profit.

Porsche The company also reported weaker half-year results, with business volume down 5% and operating profit falling 21%.

On the opposite side is General Motorswhich significantly increased its profits for the semester (+19%), and turnover grew by more than 7%. The American company Ford, in turn, earned 13% less, despite the growth in revenue.

Prospects

Regarding the future prospects of traditional companies in the sector, Senior Partner McKinsey and CompanyJuan Antonio Bajillo told EXPANSIÓN that its development is driven by a “double uncertainty” related to future sales forecasts and the technological mix of commercial volumes.

On the technology front, Bahillo explains that in the past, EV-related companies have received “more attention and therefore increased their valuations,” though he notes that the most recent expectations suggest that EV adoption “will be slower than expected.”

“Given the economic context that is showing a gradual recovery, markets have generally experienced a positive evolution in recent months, and companies in almost all sectors have benefited from this situation, including automobile companies,” explains the senior partner at McKinsey, who has just presented a report on mobility.

Finally, it highlights that at the same time there is a trend towards new forms of mobility. It thus indicates that almost a third of consumers are considering switching from their own car model to new forms of transport such as subscription or pay-as-you-go.