German carmakers see profits slump by a quarter in Q1: EY

German car manufacturers saw a 1.7 percent decline in revenues in the first quarter (Q1) of the year, while their profits plummeted by a quarter during the same period, according to consulting firm Ernst and Young (EY) on Wednesday, reported Xinhua.

The country's three major car makers, Volkswagen, BMW, and Mercedes-Benz, "suffered a major setback" at the start of the year and performed "significantly worse" than most of their international competitors, EY said in a report.

Combined revenues of the world's 16 largest carmakers in Q1 rose 3.9 percent year-on-year to 493 billion euros (533 billion U.S. dollars), the highest figure ever achieved. Total sales fell slightly to around 15.6 million vehicles, around 3 million units less than before the COVID-19 pandemic.

"The headwind for the automotive industry is increasing," said Constantin Gall, managing partner and head of mobility at EY for the Europe West region. "The economy is weakening; geopolitical tensions and armed conflicts are causing considerable uncertainty in many regions."

China remained an "eminently important market for German companies," Gall said, adding that new trade wars looming between China, the United States and Europe were very bad news for the German automotive industry. "German car manufacturers can only lose in such a scenario."

While Mercedes-Benz led the margin ranking in 2023, South Korean car manufacturer Kia took over as the most profitable in the world at the start of this year, achieving a margin of 13.1 percent; and U.S. electric car manufacturer Tesla recorded the sharpest drop in profitability, according to the EY study.