The onstage collapse of new BMW
chief Harald Krügerat the Frankfurt motor show captured far more headlines than the introduction of Porsche’s fully electric Mission E or the Audi i8. And Mr Krüger’s willingness to take the stage despite feeling tired and unwell is an apt metaphor for the European carmakers who headlined the event. They introduced ambitious new models and reiterated 2015 earnings targets — despite increasing pressure on their businesses.
Sales in China have fallen for three consecutive months. China matters because it is so profitable. The big brands achieve double-digit operating margins there. Sales in Europe return 4-5 per cent, on Bernstein estimates. Europe’s carmakers have been adding manufacturing capacity in China at the same time as domestic brands gain traction, the bargaining power of dealers is rising and price discounting spreads. Even if China sales grow again soon, margin pressure will remain.