Europe’s largest carmakers have made record profits and margins, despite many challenges.
Major carmakers made record profits last year, despite facing a threefold threat: the COVID-19 pandemic, semiconductor shortages and higher commodity prices.
European carmakers saw a 130% increase in total profits to 69.5 billion euros. Net profit rose 285 percent to 54 billion euros, thanks in part to Mercedes-Benz’s extraordinary profit of 9.2 billion at the Daimler Trucks spinoff. Mercedes said its revenue will increase by 30 percent in 2021, driven by sales of state-of-the-art models from the Maybach and AMG sub-brands.
Volkswagen was the most profitable group in Europe, with an operating profit of 19.3 billion euros, just ahead of Stellantis (18 billion euros) and Mercedes-Benz (16 billion euros, not including Daimler Trucks, which was divided in 2021).
It is unclear whether carmakers can repeat their 2021 performance this year. Russia’s invasion of Ukraine in late February brought new tensions in the supply chain and triggered multiple production shutdowns among European carmakers.
Many countries have been experiencing unprecedented levels of inflation for decades. Allianz said he revised down the eurozone GDP growth forecast for the year to 2.6% from 3.8% and upward inflation to 5.5% from 3.8%, adding that Household purchase “will have a significant impact”.
BMW, for example, last week cut its 2022 margin outlook from 7 to 9% from 8 to 10%, citing the effect of the war on supply chains and the global.
While most carmakers have minimal exposure in Russia, Renault’s control package in AvtoVAZ accounts for a large share of the group’s profits. Moscow has threatened to nationalize the assets of companies withdrawing from Russia due to the war, a scenario that could have a serious impact on Renault’s return from record losses in 2020.