Europe’s largest automakers posted file income in 2022 regardless of largely flat gross sales and provide chain and logistics issues. 

Internet income rose 22 p.c to a file complete of 67.8 billion euros ($73.6 billion) on the six largest Europe-based automakers: BMW Group, Mercedes-Benz, Renault Group, Stellantis, Volkswagen Group and Volvo Automobile (see desk, beneath), plus the most important luxurious carmaker, Ferrari.

Most of these income got here from the 4 largest teams. BMW had the most important web revenue, at 18.6 billion euros, adopted by Stellantis (16.8 billion euros), VW (15.8 billion euros) and Mercedes (14.8 billion euros).

BMW’s outcomes will not be totally comparable with these of different carmakers. Final yr it began to consolidate the outcomes of its BMW Brilliance Chinese language three way partnership after elevating its stake to 75 p.c from 50 p.c. BMW stated its 49 p.c soar in income in 2022 got here primarily from this consolidation.

Volvo Automobile, which is managed by China’s Zhejiang Geely Holding, had a web revenue of 17 billion Swedish krona (1.6 billion euros); Ferrari posted a 939 million euro revenue, whereas Renault had a 700 million euro web loss after writing down its stake in its Russia subsidiary, AvtoVAZ, following Russia’s invasion of Ukraine.

Jaguar Land Rover, owned by India’s Tata Group, was not included within the 2022 tally, as its fiscal yr ends on March 31. Figures from not too long ago listed Porsche are included within the Volkswagen Group outcomes.

The file income of European carmakers got here whilst their international gross sales fell by 2 p.c to 22 million items. Volvo gross sales fell 12 p.c, the most important drop, whereas gross sales elevated solely at Mercedes and Ferrari.

Total revenues elevated by 15 p.c to 834 billion euros, with all automakers’ revenues rising by not less than 11 p.c, aside from Renault, whose revenues have been flat (+0.4 p.c) as a result of deconsolidation of its Russian operations.

The income development was largely resulting from a rise in promoting costs and a combination that favored larger margin fashions due to the persevering with semiconductor scarcity. Automakers funneled the obtainable chips towards constructing higher-margin fashions. 

In flip, this helped working income develop much more than income, up by 21 p.c to a complete of 86.2 billion euros. The typical margin on income elevated to 10.3 p.c from 9.8 p.c in 2021.

Dave Powels, vp finance at VW’s Spanish manufacturers Seat and Cupra, stated this month that though the model’s gross sales fell by 4 p.c, income per automobile rose by 18 p.c.

Powels stated the manufacturers’ excessive efficiency was resulting from an “enhance within the proportion of [higher margin] Cupra model items offered, an aggressive income administration technique, overhead value reductions and effectivity enhancements.”

The nice occasions are more likely to proceed by way of the primary half of 2023, regardless of worries about Europe’s financial system and inflation, consultants say. Gross sales in Europe rose by 12 p.c in February, the seventh consecutive month-to-month enhance, commerce group ACEA stated. 

In line with a latest report by Evercore ISI, Europe “prevented the worst-case situation in vitality and might lastly start to capitalize on pent-up client demand from greater than three years of beneath replacement-level gross sales,” referring to a fall in demand in the course of the coronavirus pandemic. 

Europe has “the potential for a 5 p.c enhance in registrations this yr, with a attainable even larger enhance in manufacturing (plus 5 to 7 p.c)” as automakers regularly replenish shares, Evercore stated. 

A restoration in Europe, alongside forecast development of 6 to eight p.c in North America ought to assist drive international manufacturing 4 to five p.c larger this yr, regardless of China remaining flat at finest, the report stated.

Profitability this yr will rely, amongst different issues, on whether or not a slowdown in demand in Europe places downward stress on pricing.

Automakers proceed to work by way of a backlog of orders that piled up as a result of chip scarcity that began towards the top of 2020. The analyst firm Bernstein wrote in a March report that “EU supply occasions continues to drift above the eight-month vary.” 

“Demand has weakened since mid-2022, however not as a lot as anticipated,” Bernstein stated. “This secures volumes and margins for EU carmakers within the first half of 2023.”