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The big question for car manufacturers in 2024

Car buyers will be spoiled for choice with a slew of new models launching in the coming months. The question is whether consumers will be able to buy them.

Volkswagen, Stellantis, and Mercedes-Benz say their new vehicles will help accelerate growth following a broad pullback during the first quarter.

At Mercedes, earnings slumped 34% with carmaking returns sinking well below targets amid high costs for model upgrades.

All three manufacturers could face further challenges due to weak demand for electric cars in Europe and consumers feeling the strain from persistently high interest rates.

In China, a real estate crisis is putting off luxury buyers who usually are more insulated from downturns. Porsche last week reported its weakest result since listing in 2022, partly over soft demand in the world’s biggest auto market.

“The latest car sales are below expectations, and hopes of exponential sales of electric vehicles are dashed,” said John Plassard, a director at Mirabaud & Cie.

“Automakers seem to be under a lot of pressure — however, we seem to be approaching the low point of the cycle.”

Citroen E-C3

Mercedes shares fell as much as 4.8% in Frankfurt, the steepest intraday decline since October. VW and Stellantis also fell, making the SXAP auto index the worst-performing subsector of the day.

The slowdown in EV sales especially in Europe is another pain point, though Stellantis Chief Financial Officer Natalie Knight said “choppy” quarters should give way to growth fueled by new vehicles like the Citroen e-C3.

In total, the maker of Jeep and Fiat cars is introducing 25 new models this year.

Volkswagen’s brands are set to bring out more than 30 models this year to defend sales in markets including China, where local rivals dominate on electric vehicles. Parts problems recently impacted deliveries of Audis and Porsches in the US.

Returns at VW’s Audi group, a key profit driver that also includes luxury brands Bentley and Lamborghini, are under pressure due to waning unit sales.

The division is banking on new models like the Q6 e-tron, an electric SUV with fast-charging technology, to restore momentum.

“A strong March, the solid order bank, and the improving order intake in the past months are encouraging and should already have a positive impact in the second quarter,” VW CFO Arno Antlitz said.

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