German car makers have a proud total of 34 billion euros lying around in cash – just like that, in the form of freely disposable cash funds. Daimler, VW and co are in a better position than ever. And in the year to come, the cash in hand will probable increase by double-digit billions. 

According to one estimate, German car manufacturers have never been as rich as they are now. At the moment, there is more than 34 billion euros in the coffers of BMW, Daimler and Volkswagen, according to a report in the magazine "Automobilwoche" which refers to figures provided by car analyst Georg Stürzer from Unicredit of Munich.

Alone in this and the coming year, the companies will foreseeably earn another 26.5 billion euros in the form of freely disposable cash, according to the report. "This means that the German manufacturers are very well prepared to cope with the increasingly intense competition and, at the same time, can pay out higher dividends to the shareholders", said Stürzer.

The report goes on to say that the car manufacturers will be able to invest even more in environmentally friendly drives. Even large acquisitions, it continued, are possible with the abundantly filled war chests that the companies have accumulated.

A company generates its cash reserves from its free cash flow. This shows whether the car manufacturer has enough surplus liquidity after all investments and the expenses for research and development have been paid. This variable is therefore to be seen more as the reported profit than an indicator of the condition of a company. According to the analyst, the German car manufacturers are extremely healthy if measured in these terms. The high levels of incoming cash became possible, continued the analyst, because all three companies have a highly efficient investment and manufacturing policy.

Source: stern.de