German luxury cars slowed by China – the Swedish newspaper Svenska Dagbladet

I For years, China has been as high octane super fuel for the German automotive industry. But now hitting the dependence of the world’s largest car market back hard against Volkswagen, BMW and Audi as China slows down. Tough, it is also for Volvo Cars. Only Mercedes goes against the tide.

Advertising Volkswagen in China’s capital Beijing. Photo: Greg Baker / AP

If there will be seven lean years following the seven fat years remains to be seen. But it is clear that the German premium manufacturers now set themselves on weaker demand from China, which in turn leads to heightened competition, particularly in the US market.

Most vulnerable is the Volkswagen Group, Europe’s largest manufacturer, which in the first half had a full 37 percent of its total sales in China. According bilanalytikern Ferdinand Dudenhöffer at the Center Automotive Research is an unhealthy dependence that far exceed BMW’s 20 percent and Mercedes even modest proportion.

The decline in the yuan worries are not. All the German manufacturers have factories in China, not least because of the 25-percent tariff on imported vehicles. Experts estimate that 80-90 percent of German passenger cars is made in China – and therefore not affected by the exchange rate.

The recent half-yearly reports provides a clear view of the slowdown. Of Volkswagens sales decreased in China by 4 percent during the first six months, which in turn have reduced total sales by 0.5 percent compared with the year-earlier period.

The subsidiary Audi sells, however, more cars than ever. In the first half, sales rose globally by nearly 4 percent to 902,400 vehicles. But also Audi today leads the premium segment in China has now begun to feel the Asian slump. In June, sales fell by almost 6 percent of Audi’s most important market.

BMW is still on the plus. Sales in China rose by 2 percent in the second quarter and CFO Friedrich Eichiner expects that during the remainder of the year will continue at the same pace. BMW has nevertheless begun to reduce production at the Chinese factories. BMW dealers will not have to have overflowing stocks.

Unfortunately it looks with profitability. The operating result in the first half by 16 percent to 1.8 billion euros. And in the second quarter, the profit margin from 11.7 percent to 8.4 percent compared with the year-earlier period.

At the bottom of the earnings league is Volkswagen’s main brand VW by a margin of no more than 2.7 percent in the first half. That compares with Skoda’s 8.1 percent or volume manufacturers like Ford with 6 percent and GM by 6.7 percent.

Against the tide is currently Mercedes in July increased its sales in China by 42 percent, while market fell by 2.5 percent to the lowest level since February. Thanks to China and strong demand in the US is Mercedes now to reclaim its position as the world’s leading manufacturers and sports and luxury cars.

For Volvo Cars, which tomorrow presents his semiannual report looks not so hopeful. Hakan Samuelsson learn rather get going in BMW’s and Volkswagen’s footsteps – everything else would be a surprise.