From Fiat to Ferrari, results on Thursday highlighted a growing gap between the carmakers raking in cash by selling gas-guzzling pickups to Americans and those struggling to compete with Chinese rivals in a world that is slowly embracing electric.
Few illustrate that better than Stellantis, which straddles both the U.S. and Europe, and German premium automaker BMW (BMWG.DE) as it struggles with a slump in China and cuts jobs.
World No. 4 carmaker Stellantis posted results that showed solid growth in the U.S. with second-quarter sales up 6%, including an 11% increase for high-margin pickup trucks.
Detroit rivals Ford (F.N) and General Motors (GM.N) have already raised their profit outlook for this year, citing U.S. demand for pickup trucks, one of the most profitable segments.
Yet in Europe, where Stellantis faces new lower-cost Chinese arrivals such as BYD (002594.SZ) or Chery (9973.HK), sales were up only 3% as the automaker was forced to lower its prices.
French rival Renault (RENA.PA) has also said it is battling to avoid lowering prices in the face of Chinese competition.
Former Aston Martin CEO Andy Palmer said those selling pickups in the U.S., which is closed to Chinese carmakers, were gaining respite for now from pressures in other markets where they have to balance selling combustion engine cars with developing new electric ones and fending off Chinese rivals.
"The good news is you're profiting from legacy stuff like pickup trucks, but you're not making the change," Palmer said, referring to the stalling but steady shift to EVs. "And if you don't make the change, you don't fund the future."
'UNTOUCHABLE'
BMW is struggling to shape its future.
For decades, it rode high on a reputation for technological excellence and, like fellow premium German brands Mercedes-Benz (MBGn.DE) and Porsche (P911_p.DE), a long heritage that it could monetize with wealthy car buyers.
But BMW's sales in China fell 30% in the second quarter and it is on track for a third consecutive year of decline in the world's largest car market.
Munich-based BMW has not helped itself by being slow to launch its Neue Klasse, or "new class," of electric vehicles in China, where local automakers develop flashy new electric cars at a blistering pace.
It will now review working practices once deemed "untouchable" after a 35% quarterly profit drop.
BMW is not alone. Porsche will cut one in five jobs as slumping China sales have hit home. Falling China sales have forced Mercedes to scrap sales and revenue forecasts.
Their margins are evaporating because Chinese rivals are launching premium models with the latest tech at lower prices, forcing German premium brands to discount.
Even Japan's Toyota (7203.T), which has fared better than most legacy manufacturers, said its sales in China fell 17.1% in the first half of the year.
"Legacy carmakers are such a long way behind in China," Palmer said. "They need to find ways to catch up."
