In 2021, the global semiconductor shortage has seriously affected automobile production. According to AutoForecast Solutions, the global automotive market saw a cumulative reduction in production of about 10.2 million units last year due to chip shortages. In addition, the COVID-19 pandemic and rising commodity prices have also brought considerable challenges. Against this unfavorable backdrop, international mainstream automakers have still achieved record performance. In the financial reports of 14 international mainstream car companies compiled by Gaz Automobile, the revenue, operating profit and net profit of all car companies have achieved different degrees of growth.
Overview of the financial reports of 14 car companies: many car companies achieved triple-digit increase in profits, and 2 car companies turned losses into profits
Last year, the Volkswagen Group was hit hard by the shortage of semiconductors, resulting in its car sales in 2021 falling by about 600,000 units compared to 2020. Despite lower volumes, thanks to a better product mix and higher pricing, Volkswagen Group's 2021 revenue still increased by 12.3% year-on-year to $274.7 billion, taking back the top spot in car revenue from Toyota; operating profit also nearly doubled from 2020 (up 99.2% year-on-year) to $21.16 billion.
However, in terms of profits, Volkswagen is still slightly inferior to Toyota, which remains the world's most profitable automaker with an operating profit of $27.3 billion. In addition to being less affected by the shortage of semiconductors, Toyota also benefited from the depreciation of the yen as it increased the value of the company's overseas earnings.
Mercedes-Benz ranked third in the world in 2021 in terms of revenue, driven by its excellent product portfolio, stable net pricing, continued cost efficiency and well-performing used car business, with sales of the company's high-end car series up 30% and pure electric deliveries of passenger cars and light commercial vehicles increasing significantly by 64%. Since 2019, the Mercedes-Benz passenger car segment has reduced fixed costs by 16 percent, while bicycle turnover has increased by 26 percent, averaging €49,800 per vehicle.
Rising high-end car prices and strong sales also helped BMW boost revenue, with pre-tax profit more than doubling (207.5 percent) year-on-year, even exceeding pre-pandemic levels. Among them, the EBIT margin of the automotive sector reached 10.3%, the highest level since 2017; the group's net profit also hit a record high, an increase of 223.1% year-on-year. So far, BMW has outperformed its competitors in dealing with chip shortages. High-end automakers are essentially in a better position to deal with supply chain issues than mainstream market brands, as they can pass on some of the costs to consumers by raising vehicle prices.
Stellantis achieved revenue of $167.2 billion in 2021, ranking fourth in the world; adjusted operating profit nearly doubled to $19.8 billion, an operating margin of 11.8 percent, above its target of about 10 percent, due to the company's ability to execute well in synergies, resulting in net cash gains of about 3.2 billion euros. Net profit nearly tripled year-on-year at €13.4 billion, and industrial free cash flow of €6.1 billion was driven by strong profitability and net cash synergies.
Among U.S. automakers, General Motors' operating profit rose 47% year-on-year to $14.3 billion, Ford's operating profit surged 260% year-on-year to $10 billion, and Tesla's operating profit increased from $2 billion to $6.5 billion. Although Tesla's revenue and profit are still larger than Ford GM's, Adam Jonas, a top analyst on Wall Street and an analyst at Morgan Stanley, said that in the next 5 years, Tesla's revenue will exceed the sum of General Motors and Ford, although it is not yet visible, but this trend should become obvious in the next 24 months, because Tesla's delivery volume is rising, and at the same time, the cost of bicycles is also continuing to fall.
Among the above car companies, Mercedes-Benz, Ford, BMW and Tesla have all achieved profit growth of more than three digits. It is also worth mentioning that Renault and Nissan, both got rid of the previous losses in 2021, turned losses into profits, and even exceeded expectations. Renault's "value over quantity" strategy helped improve performance, and in 2021, Renault embarked on a massive restructuring to reduce fixed costs and refocus on the most profitable models and markets. Nissan benefited from favorable market conditions in the United States and the continuous improvement of sales quality in various markets, which led to a significant increase in its bicycle revenue, coupled with the company's strict cost control and the weakening of the yen, Nissan Motor's profit increased significantly year-on-year.
Vehicle prices have increased, costs have decreased, and car companies' profits have increased
In 2021, although global car sales stagnated, the revenue and profit of car companies achieved growth. There are two reasons for this, one is that the price of vehicles has increased, and the other is that the cost of car companies has decreased.
Global car production has declined due to chip shortages, and cars are in short supply, giving automakers better pricing power, vehicles can be sold at higher prices, and car buying subsidies that automakers typically offer to attract consumers are also reduced. In addition, in the context of chip shortages, automakers are using limited chip supply for more expensive models, which improves the price structure of products and increases profit margins.
Double-digit price increases in some auto markets and segments are enough to offset the impact of declining auto production and electrification costs on the profit margins of automakers. Stellantis' vehicles, for example, saw a 20 percent increase in the average transaction price of vehicles in the U.S. retail market, driven by multiple factors such as higher auto prices, lower incentives and a richer product portfolio.
In addition, the cost reduction measures of car companies have also helped to increase profits. Again take Stellantis, a group formed by the merger of PSA Group and FCA, which generated a net cash synergy of €3.2 billion in the first year after the merger, which was higher than expected. Stellantis' chief executive, Tang Weishi, has told analysts that the group has reduced its break-even point to less than 50 percent of its sales. In terms of the European market, the sales balance point in the European auto market after the pandemic is about 15 million units, which is nearly 20% lower than the 18 million vehicles before the outbreak of the new crown epidemic.
Renault also said the company was able to reduce the break-even point by 40 percent two years earlier. As part of its cost-cutting program, Renault has cut billions of dollars in operating expenses since 2020, which is a big reason for its turnaround in 2021.
The situation in Russia and Ukraine casts a shadow over the outlook for 2022
Looking ahead to this year, it is still unknown whether the automotive industry can regain its glory in 2021. Because the situation in Russia and Ukraine has brought new pressure to the supply chain of the automotive industry, it has led to the suspension of production by car companies many times.
The situation in Russia and Ukraine could have a new shock to the global economy, as many countries are coping with levels of inflation not seen in decades. Germany's Allianz insurance company said it cut its forecast for gross domestic product (GDP) growth in the euro area this year from 3.8 percent to 2.6 percent and price increases to 5.5 percent from 3.8 percent, adding that household purchasing power would be hit hard.
Bmw, for example, lowered its profit forecast for 2022 from 8% to 10% to 7% to 9% last week, citing the impact of the situation in Russia and Ukraine on supply chains and the global economy. While most automakers have little exposure to Russia, Renault's controlling stake in Lada's parent company, AvtoVAZ, accounts for a significant portion of the group's profits. The Russian government has threatened to recover the assets of enterprises that have withdrawn from Russia as a result of the situation in Russia and Ukraine, which will have a serious impact on Renault's comeback.
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