While manufacturers from the US and Japan continue to increase their performance, European companies, particularly German ones, are facing declining revenues, reduced profits, and intensifying competition. These figures are important not only for the industry but also for buyers: the financial health of automakers directly affects model lineups, product quality, prices, and the pace of technological updates.
What EY's Analysis Revealed
EY examined the financial results of the world's 19 largest automotive groups for the first quarter of 2026. At the aggregate level, the situation looks moderately stable: the combined revenue of the largest companies grew by nearly 2%. However, a strong divergence between regions is noticeable within these statistics.
Japanese automakers increased turnover by approximately 4%, American ones by 5%. European companies, by contrast, ended up in negative territory, and the German auto industry showed particularly weak dynamics: the combined revenue of German manufacturers decreased by 4%.
Profits Decline Faster Than Revenue
For automotive conglomerates, even a few percent of revenue carry great significance since it involves billions of euros. But the profit dynamics look even more indicative. According to EY, American manufacturers increased profits by 83%, while German companies lost an average of 23%.
The overall margin of the world's largest automakers declined from 5.3% to 3.5%. This is one of the weakest results in the last ten years. At the same time, among mass-market producers, the best profitability indicators are currently demonstrated not by German premium brands but by Suzuki, General Motors, and Kia.
- Suzuki — 10.9%;
- General Motors — 9.4%;
- Kia — 7.5%;
- BMW — 6.5%;
- Mercedes-Benz — 6.0%;
- Volkswagen — 3.3%.
The change is particularly noticeable compared to the recent past. The average margin of German companies now stands at 4.6%, whereas four years ago it reached 13.2%. For an industry with large investments, complex logistics, and high development costs, this is a significant deterioration.
Why German Companies Came Under Pressure
One of the reasons is the high production costs in Germany. These are influenced by labor, energy, logistics expenses, and regulatory compliance. In other regions, production is often cheaper, and local companies may additionally receive government support.
The second factor is the weakening of positions in China. For a long time, the Chinese market compensated European, primarily German, brands for problems in other regions. Now the situation has changed: sales of German brands in China are declining, while local manufacturers are becoming stronger. Chinese companies offer modern models at competitive prices and are gradually entering external markets.
Electric Vehicles and Model Lineup Structure
European manufacturers have actively invested in electric vehicles, but demand for them is not developing as quickly and uniformly as expected. At the same time, some traditional models with internal combustion engines have become less of a priority for development. As a result, companies bear high costs for new technologies but do not always receive sufficient returns from the market.
Cost reduction becomes a natural reaction to falling profits. However, it can have side effects: staff reductions, loss of engineering competencies, simplification of equipment, and reduced quality of individual solutions. All of this can further weaken the competitiveness of products.
Conclusion
EY data points to systemic challenges in the European auto industry. German companies remain major and technologically strong players, but their financial indicators have noticeably worsened against the background of growth from competitors in the US, Japan, and China. In the near future, the key tasks for the industry will be cost reduction, adaptation of model lineups to real demand, and maintaining competitiveness in the three main markets — Europe, the US, and China.
