BMW, VW, Ford Losses Should Spur Show Action; Tesla Outshines.
“Tesla is becoming a very serious competitor in the premium market”
Many global automakers lost money in the coronavirus-stricken first half of 2020 and underlying performances at BMW, Volkswagen and Ford point to the need for drastic reform, while General Motors and Tesla can rest on their laurels for a while.
Volkswagen’s performance was poor compared with Toyota, the top two biggest carmakers in terms of sales.
According to a report from the Center for Automotive Research (CAR) (https://www.uni-due.de/car/index_en.php) in Duisberg, Germany, BMW lost 1,134 ($ 1,354) euros per car in the first half, Daimler’s Mercedes lost 599 euros ($715), Volvo 343 euros ($410) and VW 313 euros ($374).
Tesla Inc made a profit of 2,890 euros ($3,450) per car, GM made 780 euros ($931), and Porsche was off the charts with a 9,853 euro ($11,764) profit per car. Ford lost 1,088 euros ($1,300) each time it sold a car. The report suggested Ford wasn’t helped by its European operation and points out GM managed to offload is loss-making Opel-Vauxhall subsidiary a couple of years ago. Incoming Ford CEO James Farley might be turning his attention to Europe.
Professor Ferdinand Dudenhoeffer, author of the report, said the data for BMW and other manufacturers revealed previous unseen weaknesses which will require action.
“BMW, with traditionally good profits, suffered its historically highest losses in the 2nd quarter. BMW has launched an austerity program and announced job cuts. (The data) shows that “hidden” problems were revealed at BMW during the Corona crisis,” Dudenhoeffer said.
BMW shocked investors with big red numbers, its first in over 10 years. BMW lost a pre-tax 498 million euros ($600 million) in the 2nd quarter. BMW’s EBIT (earnings before interest and tax) margin for cars dived to minus 10.4% from plus 6.5% in the same quarter last year, but it stuck with a forecast it made in May that the margin would range from zero to 3% for the year as a whole. BMW remained in the black for the whole of the 1st half.
“Just as surprising was the loss of the VW brand per vehicle (-313 euros) and the car division of the VW Group (-415 euros) compared to the second largest car manufacturer in the world, Toyota,” Dudenhoeffer said.
Toyota lost money in the 2nd quarter but was in the black overall in the first half and notched up a profit of 533 euros ($636) per vehicle. VW sales fell 28% in the first half and Toyota’s fell 29%, but the Japanese company still managed a profit.
“This also shows that the VW Group will certainly have to make more adjustments than Toyota. And VW benefited greatly from its China business,” Dudenhoeffer said.
“Tesla is becoming a very serious competitor in the premium market. Its development compared with BMW, Audi, and Mercedes is astonishing. Tesla is far from the other premium manufacturers (in terms of profits) – with the exception of Porsche. A start-up with enormous investments in new plants is overshadowing the established premium manufacturers in the Corona crisis,” he said.
The different performances of global Ford and more regional GM, showed the latter was adapting better to the crisis.
“GM has concentrated on North and South America as well as China. Ford is more global with Europe, but by no means more successful, as the profits or losses per vehicle in the first half of 2020 show,” according to Dudenhoeffer.
In the first half of 2020, Volkswagen lost approaching $1 billion, but expects to remain in the black for the whole of the year. Mercedes parent Daimler reported a 2nd quarter operating loss of 1.68 billion euros ($1.95 billion). Volvo, owned by China’s Geely Automobile Holdings Ltd, reported an operating loss of close to $100 million in the first half, after a $5.5 billion profit in the same period of 2019. Renault recorded a net loss of 7.29 billion euros ($8.6 billion) in the first half compared with operating income of 1.5 billion euros in the same period last year.
Groupe PSA remained solidly in the plus column. PSA, which owns Peugeot, Citroen, Opel and Vauxhall brands, and is negotiating a merger with Fiat Chrysler Automobiles, said its net profit in the first half slid to 595 million euros ($700 million) from 1.83 billion euros ($2.2 billion) in the same period of 2019.