The auto industry is currently undergoing a pivotal moment: carmakers all around the world are battling to win the electric vehicle market and adapt as proactively as possible to changing consumer demands and environmental concerns. Such struggle, combined with a changing market, can be clearly visible in the automotive giants’ financial performance.
We analyzed the financial performance of the auto industry’s most influential players – from Daimler to Toyota, Tesla, and Honda to analyze how the giants are struggling to adapt to changing times.
Daimler makes a number of different car brands, but the most popular by far is Mercedes-Benz which is where most of their revenue comes from. However, the Mercedes-Benz brand stretches far behind the luxury sedans seen on the road. A substantial portion of the company’s revenue comes from Mercedes-Benz Vans as well as trucks and buses sold under a Daimler brand.
They’ve been investing vast resources in developing electric vehicles and how they can change their existing line up to fit in with this shift from gas powered to battery powered vehicles.
The company’s revenue has grown steadily but fell much less during the pandemic than many of its rivals. Compared to 2019 Daimler’s revenue decreased only 2% in 2020 and their net income actually increased to $4.4 billion, compared to $2.6 billion in 2019.
The highs and lows of Daimler’s income & revenue are:
- Revenue: 2017 = $197 billion
- Income: 2017 = $12.6 billion
- Revenue: 2011 = $138 billion
- Income: 2019 = $2.6 billion
Ford is the second-largest automaker in the U.S. by sales, right behind General Motors. Based in Dearborn Michigan, the company has been dealing with the same challenges that all the other major car makers are having to deal with. In addition to dealing with a supply chain disruption and micro-chip shortage, the company is also having to deal with the shift to electric vehicles. The company recently announced its all-new electric F-150 Lightning.
In 2020 the company reported its first loss in a decade due to the drop in demand caused by the pandemic. However, even before the pandemic, the company has been earning very small profit margins over the past 3 years. Which their revenue has gone from $136 billion in 2011 to $155 billion in 2019, their net income was just $47 million in 2019, compared to an average of around $6 billion since 2011.
The highs and lows of Ford’s income and revenue are:
- Revenue: 2018 = $160 billion
- Income: 2017 = $7.6 billion
- Revenue: 2020 = $127 billion
- Income: 2020 = – $1.2 billion (loss)
General Motors is America’s largest automotive company by sales and has been for quite some time. They’ve been one of the most powerful corporations in this country for almost a century and they continue to push new products and vehicles on the market. However, over the past 5 years since 2016, their revenue has fallen, with a large drop coming in 2020 due to the pandemic.
In 2011 the company brought in $96 billion in revenue and $7.9 billion in net income, while in 2020 they made $85 billion in revenue and $6.4 billion in net income.
GM along with other automotive makers is suffering due to a chip shortage across the industry as well as problems across their entire supply chain. In North America, the company sold 17.7 million units in 2020, which was a decrease of 16.2% from 2019 according to their most recent 10-k filing. They currently have a 17.1% market share of the North American automotive market.
The highs and lows of their income and revenue are:
- Revenue: 2016 = $111 billion
- Income: 2017 = $9.8 billion
- Revenue: 2020 = $85 billion
- Income: 2012 = $6.1 billion
General Motor’s profit margins are similar to other companies in its industry, but are very low compared to other large corporations. Over the past 10 yeas they’ve averaged a profit margin of roughly 5%. The highs and lows of their profit margins are:
- Highest: 2017 = 6.8%
- Lowest: 2014 = 4%
Like all automotive companies, Honda’s operations were hurt badly by COVID-19 as their supply chains were interrupted. Not surprisingly their sales slumped during 2020, falling 13% to $120 billion from $139 billion in 2019.
Honda’s revenue has been increasing steadily over the past 10 years. In 2011 they brought in $96 billion in revenue and in 2017 and 2018 they earned over $140 billion. Similar to all automotive companies they operate at a small profit margin and even with such large revenue figures they earn roughly $4-$5 billion per year.
Honda also has a sizable business outside of automobiles, mostly including their motorcycle business as well as their ATVs, and their “Side-by-Sides”. In 2020 they sold 12,426,000 of these kinds of vehicles. The highs and lows of Honda’s income & revenue are:
- Revenue: 2017 = $144 billion
- Income : 2017 = $5.4 billion
- Revenue: 2011 = $96 billion
- Income: 2011 = $2.5 billion
Honda’s ROE is somewhat poor compared to other large corporations and over the past 10 years, they’ve averaged a roughly 7.2% return on equity. The lows and highs of Honda’s ROE are:
- Highest: 2013 = 9.7%
- Lowest: 2011 = 4.8%
Tesla is currently the largest automotive company by market cap, but in terms of revenue, it’s much smaller than its other rivals. Even with peak revenue of $31 billion in 2020, it is still less than a third of other major U.S. automakers, namely Ford and GM. However, the revenue growth of the company has been quite dramatic over the past 10 years, with a significant part of their revenue coming from their sale of emission credits that they’ve earned by selling electric vehicles rather than gas-powered vehicles.
The company went from revenue of $204 million in 2011 to reported revenue of $31 billion in 2020. 2020 is the first full reported year of net income for the company, given that for each of the previous years they operated at a substantial loss. This allowed them to be made part of the S&P 500 and has brought a huge amount of attention to the company and its vibrant CEO.
The company’s rapid growth has pushed other large car makers to rapidly improve on their electric vehicle efforts. The highs and lows of Tesla’s income & revenue are:
- Revenue: 2020 = $31 billion
- Income: 2020 = $721 million
- Revenue: 2011 = $204 million
- Income: 2017 = – $1.9 billion (loss)
As one of the world’s largest automakers, Toyota has had consistent revenue over the past decade of around $220 – $250 billion per year. The company derives its revenue from its two main automotive brands: Toyota and Lexus. Although the company is based in Japan and is still Japan’s largest automotive maker, their largest revenue source is from North America, and in 2020 results from China and other developing nations fell due to the global pandemic.
In 2020 Toyota had a market share of 48% in the Japanese car market. In 2011 they had $226 billion in revenue and in 2020 their revenue was $246 billion, an 8.8% increase over the decade. Their net income, however, has grown substantially, going from $3.4 billion in 2011 to $17.9 billion in 2020.
Toyota also has a financial services operation which contributes to its bottom line, and because of the capital-intensive nature of automotive making, this segment helps it earn a little higher profit margins. However, Toyota states in their latest annual report that with competition growing among different auto-makers, the profit margins for this segment may suffer.
The return on equity of Toyota over the past 8 years has been around 11-12%. In 2011 the company had a dismal ROE of 2.6% but things have steadily gotten better. The highs and lows of Toyota’s ROE are:
- Highest: 2013 = 13.3%
- Lowest: 2011 = 2.6%
There’s definitely a very exciting road ahead for the automaker giants. With changing consumer preferences as well as an emphasis on electric vehicles, it will be fascinating to see how car companies will be battling for profits and market share.
This article has been reprinted with permission from William Douthat’s Linkedin page.