Car Companies Cut Guidance and Warn of Pain to Come — At a Glance

Mercedes-Benz Group cut its full-year guidance, citing a deteriorating economic backdrop and weakness in China, and became the latest carmaker to turn more cautious about its outlook.

Volkswagen, BMW and Stellantis also sounded the alarm about the auto market in recent weeks, citing reasons ranging from muted demand to trade tariffs and competition. Meanwhile, Ford Motor and Volvo Car shifted down a gear on electric vehicles, a sign that the industry is scaling back plans for battery-powered cars amid a slowdown in demand.

Here is a list of the carmakers that recently warned about their outlook:

-- Mercedes-Benz on Thursday flagged the Chinese market--the world's biggest for cars--as particularly weak as the economic downturn triggered by the country's real-estate sector weighs on sales. In revised guidance, the German luxury carmaker said its cars unit is now expected to post an adjusted return on sales between 7.5% and 8.5%, down from a prior outlook between 10% and 11%, for the year. Earnings before interest and taxes are now expected to be significantly below the prior year's level.

-- Germany's BMW lowered its sales and earnings targets mid-September, saying expensive measures to fix a braking-system problem and muted demand in China would dilute its bottom line. BMW's electric vehicle sales have been stronger than rivals' year-to-date, but in the second quarter, Chinese sales fell 4.8% year-on-year as the threat from domestic rivals continues to grow. The luxury carmaker slashed its full-year EBIT margin for its automotive division--its key profitability metric--to between 6% and 7%, from a prior range of 8% to 10%.

-- Swedish car manufacturer Volvo Car trimmed its 2026 earnings targets early September and abandoned plans to solely sell EVs by the end of the decade. The company attributed the guidance cut to complex market conditions and the impact of global trade tariffs imposed by the U.S. and EU on China--heightened by potential Chinese retaliation. Volvo now expects an EBIT margin of 7%-8% in 2026, down from its previous goal of above 8%, and watered down its 2026 revenue goal by dropping a specific target and opting instead to measure success by whether it outperforms the premium car market.

-- Germany's Volkswagen said mid-September that it was considering closing German factories as part of a cost-cutting and restructuring exercise designed to keep the company competitive in a challenging market. Strong European rivals and fierce competition in China from domestic producers have rung alarm bells among Volkswagen executives as labor and production costs weigh on the group's competitiveness. In China, the company faces added pressure from Chinese carmakers gaining market share because of their aggressive pricing strategies and push for electric vehicles.

-- Stellantis said in early September that it was pausing production of Jeep Wranglers and Grand Cherokees--its best selling models in the U.S.--as dealers struggle with high vehicle inventories as sales sag. The company has faced criticisms from its own dealers that it has failed to adapt to the post-pandemic market, resulting stock to bloat as rivals offered more-generous deals. The European carmaker hasn't changed its guidance, but analysts at Morgan Stanley said it could issue a profit warning.

-- Ford Motor in August canceled plans for a highly touted future electric sport-utility vehicle due to tough pricing pressure as automakers resort to discounts to move their EVs. The Dearborn, Michigan, company said it would take $1.9 billion in related special charges and write-downs.

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September 20, 2024 08:29 ET (12:29 GMT)

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