The hesitant attitude of the major German car manufacturers and the majority of them sticking to combustion cars has already cost them billions of euros in losses on the Chinese market, which is important to them.
This strategy has now demonstrably failed and shows imo where the journey is heading...
Going back to combustion engines in Europe now would put them back on the loser's lane for good...
We are in the age of transformation.
If you don't change, you get a problem or you're out of the game.
Kodak, Grundig, Quelle, Blackberry, Nokia - once big names have disappeared or become a shadow of their former selves.
Anyone who still prioritises the combustion engine now will have their name added to these once great names in the historical narrative of the 21st century...If VW, Mercedes, BMW, Audi etc. etc. are still so stupid, I might have the idea of shorting them all ;-)
Combustion engine sales collapseE-car boom in China makes German manufacturers sweat
15.08.2024, 16:40Listen to articleA development in China is hurting German car manufacturers: Sales of electric cars and hybrids are increasing enormously, while demand for combustion engines is decreasing. This is particularly beneficial for Chinese suppliers. Volkswagen, Mercedes and others are seriously worried.
The combustion engine is rapidly losing importance in China. In 2020, 94 percent of all new cars there were powered by conventional fuels such as gasoline or diesel. In the first half of 2024, this figure was only 59 percent. This is confirmed by registration figures from the automotive data specialist Marklines, which are available to the "Handelsblatt".
In the first six months of this year, sales of combustion engines fell by 12 percent or 775,000 units. Sales of electric and partially electric models, on the other hand, increased by 38 percent or 1.1 million units. In July, according to the Chinese Automobile Association CPCA, more electric cars and plug-in hybrids were delivered than pure diesel and gasoline vehicles for the first time. Plug-in hybrids are often colloquially referred to as electric cars, but strictly speaking they are not.
This dramatic upheaval is leading to serious declines in sales, revenue and profits, especially for Western manufacturers such as Volkswagen, Mercedes-Benz, GM and Honda. "We are clearly seeing a displacement of conventional drives," explained Jan Burgard, head of the automotive consultancy Berylls by Alix Partners. With the parallel sharp increase in the share of electric cars in China, "the dominance of domestic suppliers is growing." The most important reason seems to be the technological superiority of the Far Eastern suppliers BYD, Geely and Li Auto in electric drives and digital cockpits compared to their Western competitors. The result: Chinese suppliers have increased their combined market share from 33 to 52 percent since 2020. German companies, on the other hand, have lost a total of almost six percentage points, and Japanese companies have lost nine, reports the "Handelsblatt".
Combustion engine sales "beautify" the balance sheet for a long time
The German car industry has been lacking competitive electric cars in China for the past few years. For a long time, this was covered up by the high sales figures for vehicles with combustion engines. However, with the gasoline business now collapsing, the situation is becoming precarious, especially for mass manufacturers like Volkswagen.
Europe's largest carmaker is threatening to earn around three billion euros less this year than in 2018 with its two local joint venture companies Saic and FAW alone. Back then, the joint productions still generated an operating profit of over 4.6 billion euros. In the first half of 2024, however, it was less than a billion euros - and thus another 350 million euros less than in the same period last year. Sales simply collapsed completely. Since 2020 alone, the core brand VW has lost a sales volume of more than 430,000 units. And it continues to decline. In the first half of the year, deliveries fell by a further four percent to 931,000 units. Across all sub-brands, the Volkswagen Group's market share in China has fallen from 19 to 14 percent within four and a half years.
In Germany, however, combustion engines are experiencing a revival. There are even discussions about postponing the ban on new registrations of combustion engines in the EU, which was decided for 2035. In China, however, the reality is completely different. This is also due to tax breaks for electric cars. In addition, there are only a limited number of license plates in many megacities. The waiting times for electric cars are shorter than for combustion engines, which gives them a clear advantage. Since April, there has also been a government purchase premium for electric cars, which, according to "Handelsblatt", will soon be doubled to 20,000 yuan (around 2,550 euros).
Another German flagship is also struggling in China: Mercedes-Benz. Since the company is mainly active in the premium and luxury segment, its business has been going quite well so far. But in the first half of the year there was a loss of 10 percent - 352,000 vehicles were sold, according to the "Handelsblatt". The proportionate result from joint production with the Chinese state-owned company Baic even shrank by 15 percent to 645 million euros compared to the same period last year. The number of imported sedans and SUVs is particularly alarming. This fell by almost a quarter from a good 80,000 to 62,000 units.
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