How profitable is it to build a car?
With the release of the annual reports of various car companies in 2021, the profitability of products has once again entered everyone's field of vision. Xu Zhijun, the former rotating chairman of Huawei, once made a bold statement when he was in office, saying that the profit of bicycles was 10,000 yuan, which was a relatively satisfactory result for Huawei. Has the situation of weak independent brands and strong overseas/joint ventures improved today? How far are we from a bicycle profit of 10,000 yuan? Oxcart.com flipped through a number of car company financial reports, hoping to find out the answer.
There is still room for self-owned brands to rise
In addition to faw group and SAIC group, which have not announced profit results, among several major independent brand automobile groups, the most eye-catching is Beijing Motor, with a net profit (the two core businesses of independent brands and Beijing Benz) of 15.151 billion yuan in 2021, and a converted bicycle profit of 14695.44 yuan. Among them, Beijing Benz's revenue reached 167.966 billion yuan, accounting for 95.48% of BAIC Motor's total revenue, while its gross profit reached 42.255 billion yuan, and the gross profit loss of Beijing brand was further expanded to 4.513 billion yuan in the same period. This means that the profitability of bicycles is mainly driven by Beijing Benz, and it also fills a large part of the loss of independent brands.
The same situation also occurs in the GAC Group. In 2021, the net profit of GAC Group reached 7.335 billion yuan, and after excluding the joint venture sector, the loss of GAC Group's autonomous sector reached 4.48 billion yuan, and the bicycle loss reached 10,081 yuan based on the sales volume of 444,400 vehicles. Among them, GAC Aeon achieved annual sales of 120,000 vehicles, and its loss amount was estimated to be about 1 billion yuan according to the share. The two Japanese joint venture car companies performed relatively steadily, with the investment income of joint ventures reaching 11.4 billion yuan in 2021, an increase of 19.2% year-on-year.
It is worth mentioning that the sales of the two major independent brands have risen in 2021, and in the joint venture sector with profit growth, in addition to GAC Toyota, the sales of GAC Honda, GAC FCA and GAC Mitsubishi have declined to varying degrees, that is to say, under the adverse impact of sales decline, the growth of GAC Group's bicycle profit still mainly depends on the steady performance of the joint venture sector.
In addition, in 2021, due to the repeated epidemics and chip shortages and other factors, the terminal preferential range of the automobile sales market has gradually decreased, and the price of bicycles has increased, which has raised the profit level of car companies to a certain extent at the moment of growing consumer demand for cars.
From the perspective of private car companies, there is still a large room for climbing the profitability of bicycles. In 2021, the bicycle profits of Great Wall Motor, BYD and Geely Automobile were 5250.59 yuan, 4143.42 yuan and 3275.60 yuan, respectively. In addition to the uniqueness of Great Wall Motors, bydir and Geely Automobile's bicycle profits have double-digit declines compared with 2020.
It is worth mentioning that because BYD has a wide range of business tentacles, it is biased to simply calculate bicycle profits with total profits, and its bicycle profits should be reduced again according to its 50% business proportion. At the same time, in 2021, BYD's annual new energy subsidy income reached 5.867 billion yuan, and another government subsidy of 2.263 billion yuan was included in the profit and loss of the current period, which totaled 8.13 billion yuan of subsidies + subsidy costs, filling an important gap for the net profit of 3.045 billion yuan. After the complete withdrawal of the subsidy policy, BYD will also face a more severe embarrassment of bicycle profit decline.
Changan Automobile has not yet released the 2021 annual report, so we have selected a number of institutions to predict and analyze its annual net profit, according to the highest net profit of 5.123 billion yuan, its bicycle profit should be about 2918 yuan, compared with the previous year's 1659 yuan has a qualitative leap. However, in the "three independent strong (Geely, Great Wall, Chang'an)", it is still in a lower position, and from the perspective of the development process of electrification, the "three strong" camp is withstanding the violent impact of BYD.
As for Geely Automobile and Great Wall Motors, after several years of short-lived bicycle profit growth, it has shown a downward trend in recent years, of which Great Wall Motors has fallen compared with the peak of 8524.5 yuan, but the overall performance is stable and rising, and the bicycle profit in 2021 will break through the 5000 yuan mark. The downward trend of Geely Automobile is more obvious, following the fall below the 5000 yuan mark in 2020, it fell below the 4000 yuan mark in 2021, and the profit of the bicycle was only 3275.6 yuan.
The new forces generally lost money
The new force of car manufacturing, the profit of bicycles is still pulled out by Tesla, as high as 37575 yuan, almost reaching the forefront level of overseas luxury brand car companies, it is also the only new force car company with a positive gross profit margin so far.
At the same time, according to the latest fourth quarter financial report data, Tesla's overall gross profit margin reached 27.4%, the bicycle gross profit margin was as high as 30.6%, and Porsche's bicycle gross profit margin in the same period was only 16.7%, which was about half of Tesla's level.
As a new car-making force that has been advancing at full speed in recent years, Tesla has continued to grow in scale and the cost of vehicles has been declining, and it is expected that its ability to make money will be further improved in 2022.
Under Tesla, the life of several new forces in China is not good. Subject to multiple unfavorable factors such as repeated epidemics and parts supply cuts, even the new forces in the head camp have failed to achieve an annual delivery of more than 100,000 vehicles in 2021.
Xiaopeng Automobile, the top seller in 2021, delivered 98,400 new cars, and its bicycle loss was as high as 49,500 yuan, which was also the most loss-making company in the head camp. The runner-up in sales, WEILAI, delivered 91,400 new cars in 2021, and the loss of bicycles was as high as 43,900 yuan. The ideal car known for "slamming doors" will deliver 90,500 new cars in 2021, which is not much different from Weilai. Although the net profit was barely positive in the fourth quarter, the net loss of bicycles for the whole year was still 3558 yuan, and there was still a gap in the positive profit.
Whether it is sales performance or profitability, WEILAI has no chance of winning the championship. In 2021, NIO ushered in the second year of positive gross profit margin, with an annual gross profit margin level of 18.9%, an increase of 64% over the previous year. The annual gross profit margin of Ideal Automobile has exceeded the 20% mark, reaching 21.3%. However, Li Bin, the founder of Weilai, did not care about this, and said that the price of bicycles will not change in the future, and the gross profit margin will not be significantly improved. The face is that shortly thereafter, due to the negative impact of raw material price increases and other negative effects, Weilai announced that the starting price of its main sales models ES8, ES6 and EC6 has increased by 10,000 yuan.
The ideal car, which prides itself on being the ultimate in cost control, also saw a large-scale cost increase in 2021, including the expansion of the company's scale, and the number of R&D personnel increased from 1633 at the end of March 2021 to more than 5,000 at the end of December 2021. Subject to this, the cumulative R&D expenditure of Ideal Automobile reached 3.29 billion yuan in the whole year, an increase of nearly 200% year-on-year.
Aware of the surge in costs caused by the rapid expansion of personnel, in April 2022, Ideal Auto was exposed to lay off 15% of its employees, and it is expected that 1,800 people will be affected by this, and Ideal Auto will reduce salary expenses by about 500 million yuan. Although Ideal Auto clarified this, saying that the rumors were untrue, from the perspective of cost reduction and efficiency increase, perhaps layoffs are the quickest way for Ideal Auto to maintain a good quarterly net profit.
Although the situation is not optimistic, Li Xiang, the founder of Ideal Auto, still has optimistic expectations, after he released an internal email saying that in 2025, Ideal Auto will become the first place in China's intelligent electric vehicle companies, delivering more than 1.6 million new cars annually and gaining more than 20% of the market share in the market. From the perspective of scale effect, its bicycle profit may increase at that time.
In 2021, Xiaopeng Automobile is the largest net loss in the head camp of the new forces, reaching 4.863 billion yuan, an increase of 78% year-on-year. Therefore, despite the strong sales volume, in the case of low revenue, the bicycle loss is also a big gap with the other two. The crux of this also needs to be attributed to Xiaopeng Automobile's lack of cost control and the low gross profit margin of the product portfolio.
In 2021, the overall gross profit margin of Xiaopeng Automobile is 12.5%, according to the planning of helmsman He Xiaopeng, this number should be doubled, which is the ideal gross profit margin level of Xiaopeng Automobile. Obviously, compared with the target planning of Weilai and Ideal Automobile, which are eager to shrink costs, Xiaopeng Automobile's top priority is to focus on models with higher gross profit margins.
Overseas car companies are gradually picking up
In the camp of overseas car companies, BBA is still in the forefront with a high level of bicycle profits, and it is no wonder that many car companies have the ambition to launch high-end brands together in this year, and the high bicycle profitability is indeed full of temptation. In 2021, Mercedes-Benz got a bicycle profit of 42,038 yuan, an increase of 179% compared with the same period in 2020. BMW ranked second with a bicycle profit of 34,145 yuan, but the year-on-year increase was as high as 307%, better than the performance of Mercedes-Benz and Audi in the same period. As for the Audi brand, it is the smallest growth rate of the three car companies, but the profit of bicycles in 2021 is still as high as 22600 yuan.
Although the increase in bicycle profits is average, for Audi, 2021 is indeed a year of outstanding results. In the year, the Audi brand sales revenue reached 53 billion euros, operating profit of 5.5 billion euros, up 114.09% year-on-year, operating sales profit margin reached 10.4%. At the same time, the Audi Group delivered a total of 1.689 million new cars worldwide, of which the Audi brand delivered a total of 1.6805 million new cars in 2021, which was even slightly lower than the 1.6928 million units in 2020.
This means that in the absence of sales growth, the Operating Profit of the Audi brand has more than doubled in 2021, removing the impact of inflation and other factors, and Audi's active management at the supply chain level has begun to show results, overcoming the adverse factors of chip shortage and rising raw material prices. At the same time, the strategic adjustment of product pricing and the improvement of the contraction of fixed costs have become an important reason for the sharp rise in the profitability of the Audi brand.
The bmw group's development path is obviously more excellent, in 2021, the world sold 2.5215 million new cars, an increase of 8.4% year-on-year; the group's total revenue of 111.239 billion euros in the same period, of which net profit reached 12.463 billion euros, a year-on-year surge of 223.1%, setting a record for the highest net profit in history.
Sales are basically flat, net profit growth rate is fast, almost the common performance of the three BBA car companies. In 2021, Mercedes-Benz's global passenger car sales totaled 209 units, down 5% year-on-year, but the net profit growth rate is very impressive, after joining the commercial vehicle business profit, the group's total net profit has surpassed Toyota, becoming the world's most profitable car company. In 2019, just before the outbreak of the epidemic, Toyota's global net profit was more than 6 times that of Mercedes-Benz at that time.
Similar to Toyota, before the outbreak of the epidemic, Volkswagen Group was also at the top of the net profit pyramid, compared with 2019, Volkswagen Group's net profit in 2021 increased by 9.95%, and its performance was limited compared with the previous recovery, and its bicycle profit in 2021 reached 12039 yuan. Compared with the BBA camp, toyota, Volkswagen and other car companies have more complex product architectures and are not oriented to a certain type of market segment, so they are more seriously affected by the epidemic at the supply chain level. Specifically, in 2020, the net profit of Volkswagen and Toyota fell by 37.1% and 23.13% respectively year-on-year.
In contrast, GM's growth rate is more stable, with a net profit of 63.9 billion yuan in 2021, an increase of nearly 50% compared with 2019 before the epidemic. In 2021, GM sold about 6 million new vehicles worldwide, down 13% year-on-year. However, the profit of bicycles exceeded 10,000 yuan, reaching 10,644 yuan, an increase of 63% over 2020.
This means that the continuous optimization of the product structure has enabled GM to achieve a contrarian rise in bicycle profits under the premise of declining sales, and has performed well. In addition, the Chinese market sold 2.9 million vehicles, supporting half of the Group's sales.
epilogue:
Judging from the changes in the profits of global car companies, 2021 is still a year of profit and loss. However, we also found that the bicycle profits of high-end brands have always been at a high level, and in view of this, many independent brands have opened an upward road to impacting high-end.
From the analysis of the profitability of car companies, making money in car manufacturing is inseparable from the efforts of cost control, scale advantage and product development efficiency. With the continuous influx of capital and the succession of novices, the competition on the car-making track will become more and more intense.