Carmakers flag difficult year on costs, muted EV demand

Automakers across Europe and Asia are warning of a challenging year as rising costs and waning demand for electric vehicles weigh on profits.

Mercedes-Benz Group AG on Wednesday said it will sell combustion-engine cars longer than expected amid disappointing EV sales. Toyota Motor Corp., which sees operating income slumping by a fifth this fiscal year, is relying on hybrids to counter lower output. BMW AG, even as it’s doing better on EVs, flagged problems including higher manufacturing expenses.

Persistent inflation, muted economic growth in much of Europe and a protracted recovery in China — where excessive EV discounting is hurting manufacturers — are adding to the industry’s headaches.

“The price war in China is getting tougher everyday,” Toyota Chief Financial Officer Yoichi Miyazaki said. “We’ll have to continue enduring for several years until we have more battery EVs to offer.”