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Car brands beat their profits due to the sale of more expensive cars

"Whenever we release new regulations, automakers respond negatively, but then they always comply." This phrase was said by Frans Timermans, the vice president of the European Commission, after proposing the European entity the ban on the sale of combustion cars in the European Union as of January 1, 2035, five years ahead of schedule.

And here Carlos Tavares, CEO of Stellantis, once again sent the message that politicians should explain to their citizens why cars are going to be more expensive: investment in the transformation of production lines to stop making cars combustion and make electrical; The introduction of more connected systems in the vehicle, the transformation of the distribution model and the arrival of new players in mobility put the profitability of traditional automotive multinationals in check.

To this must be added the shortage of semiconductors that has caused and is causing stoppages in the production lines of automobile factories. In Spain, from January to June, 1,205,577 vehicles have been produced, which is 21.6% less than in the same period of 2019 before the pandemic. 332,196 fewer vehicles have been produced this year. All of the Spanish plants have undergone ERTE processes by having to stop production for several days or weeks due to the lack of parts.

The automobile industry eliminated from its thinking the accumulation of vehicles in fields waiting to be bought as a result of the 2008 crisis. Now it is manufactured to order. And this causes the customer to be remotely directed towards the most equipped vehicles: those that leave the manufacturer with the greatest profitability. A redirection that has been accused of the lack of chips: "If you want the car now, better choose this model; the one you want will take nine months," the directors of the Spanish subsidiaries explain to this newspaper.

Las marcas de coches baten sus beneficios por la venta de coches más caros

In this way, manufacturers are achieving their goal of making fewer cars and selling them more expensive. In the words of Tavares, "we have to earn more money per vehicle manufactured." Luca de Meo also said it, after landing at Renault: "We have a price positioning problem."

The French group has raised the net price of its Renault and Dacia brand vehicles by 8.7% in the first half of 2021. The Dacia Sandero, the best-selling model in Spain in July, has an average price higher than the €15,000; It is not a 'low cost' car for less than 10,000 euros, given that the best-selling version is the Stepway, the most equipped.

Renault Group has obtained an operating profit in the first half of the year of 654 million euros and that global sales were 24% lower than those made in the same period of 2019. The French group anticipates that the shortage of chips will stop making 200,000 cars this year.

high margins

But not only Renault has turned the balance. Stellantis, in its first semester of life, has obtained 8,622 million euros of operating profit, with an operating margin of 11.2%. At the presentation of results, Richard Palmer, the group's chief financial officer, said that "this margin is a record for the two groups before the merger [PSA and FCA]" and much higher than that of other rivals.

Toyota obtained a 7.9% operating margin in the first quarter; the Volkswagen Group, number two in the world, registered a margin of 8.8%, while Nissan obtained 4.5%, and Renault 2.8%. For its part, Hyundai reached 6.2%; Ford, 9.1%. Only the premium manufacturers do better than Stellantis, with Daimler at 12.2% and BMW at 13%.

But if we talk about hard cash, not percentages, the numbers speak for themselves. Toyota has reported the best first quarter in its history with 7.7 billion euros of profit at the current euro/yen exchange rate. The BMW Group has multiplied its results by 20 to 7,623 million euros. Or the record six-month operating profit of 11,358 million achieved by the Volkswagen Group. Or the Hyundai Group, which reached 1,385 million euros at the current euro/won exchange rate, which is its best quarter in seven years. Or Volvo Cars, which multiplied its profit by four to 1,763 million in the first half of this year.

Or, to cite a more extreme case, Ford Motor has reported profits of 3,200 million euros at the current dollar/euro exchange rate, despite estimating the manufacturing cutback caused by the lack of semiconductors at 700,000 vehicles. In fact, it has raised its forecasts for the year dramatically in the face of "the strong order book that we have accumulated," said John Lawler, Ford's chief financial officer, in the presentation of results.

Now the US company expects an operating profit of between 9,000 and 10,000 million dollars, well above the 3,500 million previously estimated.

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