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[text/observer network qi qian] following volkswagen, another well-known german automaker is also in deep trouble. on september 10, local time, german bmw lowered its full-year profit forecast, predicting that this year's ebit margin will be between 6% and 7%, compared with the previous forecast of 8% to 10%. bmw said the reason was the sluggish demand in its main market, china, and the large-scale recall caused by problems with the brake system supplied by continental.

"german automakers are collapsing in a crisis that undermines the future of the country's most important industry." bloomberg news published an article on the 11th, saying that the recent series of blows from automakers have further impacted the german economy, which has been faltering since its "decoupling" from russia's cheap energy.

bmw slashes profit forecast, blames china and suppliers

according to cnn, bmw issued a statement on the 10th saying that the continued sluggish demand in the chinese market has affected its sales in china, and claimed that "despite stimulus measures, consumer confidence remains weak."

at the same time, bmw said that the large-scale recall caused by the brake system defect had a negative impact on sales in the second half of this year. the statement blamed the defect on its supplier, german transportation industry manufacturer continental, saying that more than 1.5 million vehicles were affected and recalled, of which about 1.2 million had been delivered to customers and another 320,000 faced delivery delays.

"bmw, one of the few bright spots among german industrial giants, has been defeated by continental." bloomberg news said that bmw had previously outperformed some of its competitors in its transition to electric vehicles, surpassing tesla in july and leading the european electric vehicle market for the first time. but the recall incident undoubtedly poured cold water on bmw, causing the company's stock price to plummet: it closed down 8.7% in frankfurt, and the company's market value shrank by about 5 billion euros.

analysts at u.s. securities investment firm jefferies said in a report that the scale of bmw's downward revision of its profit expectations "means that its business in china will deteriorate more significantly," and estimated that the company's sales in china in the third quarter may fall by more than 30% from the same period last year.

a bmw factory in shenyang visual china

bloomberg pointed out that now, german automakers are falling into a crisis, damaging the future of the country's most important industry. in addition to bmw, continental is another example of a century-old german company struggling in its transition to electric vehicles.

bmw said it is weighing a claim for compensation from continental, which could cost 75 million euros to fix the brake problems, according to bloomberg intelligence auto analyst gillian davis.

prior to this, continental lost 7,000 jobs in its automotive division due to deep restructuring. the eu raided the company's headquarters in january for suspected price manipulation with other tire manufacturers. it was fined 100 million euros in april for its involvement in the diesel emissions scandal. the company expects its profits this year to be significantly lower than last year's 17.1 billion euros, and predicts that its automotive manufacturing operating profit margin will hit a record low of 6%.

"this is not just a dilemma for germany, it's a dilemma for the whole of europe"

shortly before bmw sharply lowered its profit forecast, volkswagen issued a statement on september 2 local time saying that in view of the current "extremely tight financial situation", it did not rule out the possibility of closing its car manufacturing plants and parts factories in germany, and planned to negotiate with union representatives.

volkswagen also terminated a job protection agreement signed with unions in 1994, reneging on a promise not to cut jobs in germany before 2029.

at a staff meeting held on the 4th, volkswagen executives acknowledged the current predicament and said the group would implement "cost reduction and expenditure reduction", which triggered fierce protests from employees. a person who attended the meeting revealed that volkswagen ceo oliver blume said at the press conference, "no more checks from china." reuters said that he was referring to the decline in volkswagen's profits in china, its largest market.

on september 4, volkswagen held an employee meeting at its headquarters, with workers holding signs to protest against foreign media

bloomberg said that volkswagen's threat to lay off employees in germany and consider closing its factories in germany for the first time is a reality test for europe's weak auto market, which will face more factory closures in the future.

data shows that annual car sales in europe are still about 3 million units below pre-pandemic levels, resulting in overcapacity in factories and thousands of jobs at risk. according to analysis, nearly a third of the large passenger car factories of the five largest european automakers (bmw, mercedes-benz, stellantis, renault and volkswagen) were not fully utilized last year, producing less than half of their production capacity.

comparison of factory utilization rates of the five largest european automakers before and after the epidemic bloomberg chart

the report analyzed that in recent years, in addition to sluggish demand, the threat of european factory closures has become increasingly serious due to rising labor costs caused by worker shortages and a sharp rise in energy costs caused by the russian-ukrainian conflict. if the situation cannot be reversed, it will deal a blow to the european economy: the automotive industry accounts for more than 7% of the eu's gdp and creates more than 13 million jobs.

the situation is particularly dire in germany, where automakers and their suppliers, which for decades have been dominated by vehicles powered by internal combustion engines, are struggling to make the transition to electric vehicles and are having trouble competing with automakers from other regions.

fabian brandt, an expert at oliver wyman, told bloomberg that european auto factories are facing "huge integration pressure" and inefficient factories will find it difficult to survive. matthias schmidt, an independent german auto analyst, also said: "more and more automakers are starting to compete for a smaller market share. some factories will have to close."