If you’ve been thinking about buying a car lately, go to the 4s and you’ll find that the price of gas cars has collapsed, with huge discounts on everything from zero million-dollar family cars to million-dollar Porsches.
Because of the rapid development of new energy vehicles, crazy to seize the market, the collapse of the oil car is doomed.
Prices are only part of the story, and countries whose economies depend on the car industry, especially fuel-burning vehicles, are in for a rough ride. We thought Japan would be the first to go wrong, but it was Germany.
On January 15th the Statistisches Bundesamt published figures showing that 2024 German gross domestic product, adjusted for prices, fell by 0.2% in real terms from a year earlier, the second consecutive year of negative growth. Some friends may feel strange when they see this. Isn’t it just down by 0.2% ? It’s almost negligible.
What impact can it have?
Zunächst ist deutschland ein Hohes Wohlfahrtsstaat. Im vergangenen Jahr gab es 476,8 milliarden Euro aus, von Denen Wohlfahrtsausgaben Rund 175,6 milliarden euro-36,8 prozent. Future social spending will only increase, not decrease, because of population ageing and other problems.
But now that the economy isn’t growing and taxes can’t be raised, where will the money come from? Either raise taxes and create social tension, or cut spending in other areas. You’re like Los Angeles, where the fires are burning, and in order to increase spending in other areas, they actually cut fire department costs.
Does Germany want to do the same? Second, because of the issue of immigration, whether to support Ukraine, and the clash of political ideas between the left and the right, social tensions in Germany are very sharp.
On December 20 last year, six people were killed and more than 200 injured in a car crash at a Christmas market in Germany. And the killer? Is a Saudi immigrant doctor, because of dissatisfaction with the increasingly Muslim Germany, so take extreme action to retaliate against society. Therefore, in the case of such acute social contradictions, when the economy was growing before, everyone had money to earn and benefits to enjoy, which could naturally cover up many problems. But now that the economy is starting to falter, these hidden tensions will soon overwhelm them and cause even bigger problems.
So, for a country like Germany, the economy has to grow. But the problem now is that, as Europe’s biggest car nation, Germany is bearing the brunt of the crash. German manufacturing output 2024 by 3 per cent, with steep declines in machinery and equipment and in the automotive industry. For example, we are most familiar with mercedes-benz, BMW, Volkswagen, the fourth quarter of last year’s data has not yet been released, but the first three quarters have been out.
In the first three quarters of last year, cumulative revenues fell 4.7 per cent year-on-year, or 31.4 per cent. Volkswagen’s net profit plunged 64% , BMW’s 84% . The Big Boys Aren’t doing well, let alone the little guys below them, like Gerhardy plastics technology, which makes the logo for Mercedes-benz’s three-pronged star.
They were founded in 1796, in Napoléon’s time, as a supplier of metal products to Mercedes-benz after the invention of the automobile. Napoléon, the First World War, the Second World War, the Cold War, the collapse of the Soviet Union, Countless World Cup Olympics, 200 years of vicissitudes of the enterprise, the result is not long ago, closed down.
Because of the long period of rising costs and shrinking demand, it has had a huge impact on their net profits. When the enterprise began to lose money, cash flow problems, the boss a look, simply to close the factory, anyway, for so many years, his money is enough, there is no need to lose money doing business. The boss of the factory is gone, but what about the employees below?
What about the factories upstream and downstream? In 2024, the number of German bankruptcies rose to 22,400, up 24.3% from the previous year. Most of these were in the manufacturing sector. The 2024 rate of bankruptcies in German manufacturing has increased by more than 80% , and it has become a hell of an industry. The core reason is that due to the impact of new energy sources, sales of traditional fuel vehicles have declined. However, oil vehicles have been sold for so many years, and have grown for so many years.
The production line has also been expanded, and production capacity has also risen, and then suddenly you don’t need it. That creates excess capacity, so that costs rise and cash flows tighten. In the simplest case, you could make 100 cars a month and sell them, and your capacity, and your workers, would be prepared to make 100 cars. But only 90 have been sold this month.
What should I do? Two options. The first way: a price war, next month big price cuts, sell 110 cars, digestion capacity. But this is bound to affect the company’s profits. And consumers can develop a habit of discounting. You got a discount of 30,000 yuan last month. Why not this month? No, we’ll take it. So once this model price reduction, later want to raise prices back, but it is not so easy.
In this way, the company’s profits will be affected for a long time. The second way: cut capacity, since each month can only sell 90 cars, then I put the original capacity cut 10 on it? Of course you can.
But if you cut 10 cars, you’ll have to cut 10 parts. Will the upstream and downstream manufacturers have to cut capacity as well? There is now a decline in capacity, the machine is not to turn off a few, the staff do not need so many people, but also for layoffs. What you did when you were expanding, now you have to reverse it all back. In addition, the conflict between Russia and Ukraine has greatly reduced the supply of natural gas, and the price of natural gas has risen.
Natural gas is an important energy source for electricity production. What kind of manufacturing industry can do without electricity?
As production costs go up, demand is waning. As a result, there will be a large number of small and medium-sized business closures, tax cuts, workers unemployed, the number of unemployed Germans has increased to 2787000, the average annual unemployment rate of 6% . You said in this case, the economy can not problems?
Therefore, new energy not only has an impact on the automobile market, but also on the industrial chain of oil vehicles, and has a huge impact on industrial countries around the world, especially those countries that take oil vehicles as a pillar industry.
If Germany is like that, Can Japan be far behind? Today in Germany is tomorrow in Japan. They have enjoyed decades of fuel-car dividends, and now the good times are finally over! Image from the web