Morning Briefing: Record for Dax, crisis for car manufacturers

Good morning, dear readers. On Monday, the Dax index broke the 26,000-point mark for the first time and reached a new record - but Germany's most important industry is just watching. BMW, Mercedes, and VW have so far been among the biggest losers of the stock market year. The figures published by Handelsblatt today show profound upheavals: the profit margins of BMW and Mercedes in the core car business have fallen below the level of mass manufacturers in the first half-year.

Analyst Matthias Schmidt puts it into perspective: the reason is that the China business is collapsing - and German premium manufacturers have little to counter it. The combustion engine business, which they have mainly relied on in China, is collapsing, and they play no role in electric cars. In addition, there are US tariffs, for which there is no deal in sight, and rising material costs due to the Iran war.

Even the growing electric car market in Europe is of little help. This mix is eroding profits. The pressure to find a solution is growing. In China, for example, manufacturers must tailor their offerings more closely to the market. But this hides a dilemma: locally suitable models and a lower cost base could dilute the premium brands.