The Herald - The Herald Magazine
Car makers in a jam as profits plummet
DESPITE a year of innovation and a surge in new product, the value of the automotive industry's biggest global companies fell by more than £100bn in 2018.
At the start of the year, they had a shared market value of almost £700bn, but by the end of 2018, this had dropped by £122bn to £588bn.
Mercedes parent company Daimler felt the problems most and issued two profit warnings, with its value falling by £22bn. Ford saw the second biggest drop, down £13bn, with Volkswagen close behind, down £12bn.
Speaking to the Telegraph, professor David Bailey of Aston University's economics, finance & entrepreneurship department, said: “The shares of some car companies have been in decline for several years, but 2018 saw a sharp reversal for others that had previously been doing well.
“This has been driven by both sectorspecific and broader economic trends. From a sector point of view, diesel's demise has dented profits and companies are having to invest heavily in new technologies such as electric and autonomous cars.
And he added: “The threat of a tariff war between the US and China and a big slowdown in China has dented growth prospects.”