\nprovides daily analysis of global automotive news and events. We
\ndeliver timely context and impactful analysis for navigating the
\nfast-moving industry. Behind the Headlines offers a bi-weekly dive
\ninto recent top stories.<\/em><\/p>\n
In 2024, industry-wide pressures include two key trends: First,
\nsluggish consumer acceptance to new battery electric vehicles
\n(BEVs), and second, vehicle affordability concerns pushing against
\nnatural demand and increased inventory.<\/p>\n
With the latest round of earnings reports, most automakers are
\nseeing pressure on operating margins. At the top line, a difficult
\nmarket in mainland China and the uneven transition to BEVs would
\nseem to be the obvious cause. However, across the board, automakers
\nare facing drags on profitability that are both common to the
\nindustry and company specific.<\/p>\n
Let's take a look at changes in vehicle sales, revenue,
\noperating income or gross profit and operating income or gross
\nprofit margins.<\/p>\n
![\"Top](\"https:\/\/cdn.ihsmarkit.com\/www\/images\/0824\/top-automakers-financial-reporting-august-2024_090820240800515.png\")
<\/p>\n
Volkswagen and Ford see improved revenue but lower
\nmargin<\/strong><\/h2>\nVolkswagen's revenue improved despite declining sales \u2014 but
\nnon-operating factors had an impact on operating results. VW says
\nthat adjusting for those factors, operating margin improved from
\nfirst quarter to second quarter.<\/p>\n
Within VW Group results, Audi saw a decline in operating margin,
\nas sales fell on supply constraints. Porsche's operating revenue
\nand margin fell on costs for model ramp-up. Both Audi and Porsche
\nare introducing new products which affect costs today but leave
\nthem better positioned for the future.<\/p>\n
VW Group Core brands also saw operating margin fall, though the
\ncompany noted restructuring efforts as the cause rather than market
\nconditions. For VW Group, there seems to be less turmoil on the
\nbalance sheet related to the BEV transition or the difficult market
\nin mainland China.<\/p>\n
While Ford saw increased sales and revenue in the first half of
\nthe year, its operating income took a significant hit. Ford is
\nstruggling to see the level of traction it wanted for the Ford
\nF-150 Lighting and Mustang Mach-E BEV products, and in 2024, Ford's
\nstory is about the “freedom of choice” the company can offer in
\npropulsion solutions.<\/p>\n
The company is expecting to see a US $5 billion loss from its
\nModel e electric vehicle division in 2024. However, the main reason
\nfor the division's decline in first-half 2024 performance was
\nunexpectedly high warranty costs in the second quarter, along with
\nhigher costs for new-product materials and manufacturing.<\/p>\n
Ford no longer reports financial results geographically but says
\nthat it is profitable in mainland China and all of its
\ninternational regions.<\/p>\n
BMW and Mercedes-Benz see sales, revenue, and margin
\nfall<\/strong><\/h2>\nBMW and Mercedes-Benz both reflected lower sales and revenue,
\nwith Mercedes-Benz seeing larger declines in all four metrics.
\nThese companies noted industry conditions in mainland China
\nadversely impacting performance. Both brands are heavily
\nelectrifying, with BMW carrying a bit more breadth in its BEV
\nofferings at this point. The BMW purpose-built BEV Neue Klasse
\narchitecture arrives in 2025, causing increased engineering and
\ndevelopment spend in 2024.<\/p>\n
BMW leadership professed itself satisfied with the performance
\nof its core automotive unit in the first half of 2024, though BMW
\nhas experienced a harshening of the global operating environment.
\nThough BMW has vowed not to engage in the price war in mainland
\nChina, the automaker also noted weaker consumer sentiment in China
\nand heightened competition as drags on performance.<\/p>\n
Although BMW declined in all four metrics, the declines were
\nless severe than many others. For Mercedes-Benz, the comparatively
\nmore difficult quarter has led leadership to revise its
\nprofitability target for 2024, though the Mercedes-Benz Cars
\ndivision is still ahead of its margin goal of 10%.<\/p>\n
Mercedes-Benz Mobility division is being affected by ramp-up
\ncosts for the Mercedes-Benz charging network as well as the
\nchallenging market in mainland China.<\/p>\n
General Motors and Toyota report sales declines, but
\nimproved revenue and margin<\/strong><\/h2>\nGeneral Motors sales declined in the first half of 2024, but
\nstrong pricing improved revenue and cost discipline. The launch of
\nless-complex new-generation ICE vehicles contributed to a whopping
\n41.8% improvement in operating income and a 2.1-point increase in
\noperating margin.<\/p>\n
GM increased its full-year 2024 guidance, though the company
\nalso noted another delay in completing the conversion of a vehicle
\nassembly plant to build full-size BEV trucks to mid-2026. GM is
\nalso still struggling in mainland China; during the earnings call,
\nCEO Mary Barra said GM is working with its JV partner to
\nrestructure the business for sustainable profitability.<\/p>\n
Toyota reported an overall decline in first quarter sales,
\nincreased revenue, increased operating income and improved margin.
\nToyota improved its profit despite an ongoing issue in the Japanese
\nmarket over certifications, which has required vehicles to be held
\nand re-certified or recalled.<\/p>\n
Global vehicle sales dropped in the quarter on the interruptions
\nin Japan, with North America and Europe seeing sales improve.
\nToyota is strongly advancing hybrid technology in 2024, and
\nelectrified vehicle sales reached 43.2% of global sales for the
\ncompany.<\/p>\n
However, Toyota operating income was negatively affected by
\nincreased spending on higher labor costs and R&D expenses, both
\nrelatively typical items for the cyclical auto industry, while
\nincreased marketing efforts positively affected operating
\nincome.<\/p>\n
Tesla, Stellantis, Nissan see largest margin
\ndeclines<\/strong><\/h2>\nTesla's declining performance in the first half of 2024 is
\ndirectly related to sales declines and pricing actions. Adjusting
\npricing has not provided the sales lift the company wanted, but it
\nhas drastically affected gross profit and margin.<\/p>\n
Some of Tesla's sales struggles are related to natural consumer
\ndemand for BEVs beginning to take a slower growth pace than earlier
\nyears, but also related to fierce competition from technologically
\nadvanced startups, highly cost-efficient and sufficiently
\ncompetitive mainland Chinese BEV automakers, and highly competitive
\ncompetition from traditional brands. Tesla's financial results are
\nimpacted by economic conditions, BEV demand and a more complex and
\ncompetitive vehicle landscape.<\/p>\n
Though Stellantis did remain profitable, poor volume and mix
\nalong with currency translation pulled revenue down by 14%.
\nStellantis saw unadjusted operating profit fall about 51% and a
\nmargin decline of 5.9 points.<\/p>\n
Some volume decline was on discontinued models in North America
\nand inventory adjustments in Enlarged Europe. Stellantis
\ndifficulties in North America include inefficient marketing
\nstrategies and higher-than-necessary inventory growth.<\/p>\n
Stellantis is among the automakers who has long struggled in the
\nmainland China market. Moving forward, CEO Carlos Tavares is
\ncounting on a JV with Leapmotor to address mainland China as well
\nas to provide an inexpensive BEV for production and sale in other
\nmarkets, initially Europe.<\/p>\n
Nissan saw flat sales versus the April-June 2023 period, and
\nrevenue improved. However, Nissan's operating income plummeted
\ncompared with a year earlier and margin dropped. Nissan largely
\nblamed its North American performance for the weak result,
\nannouncing plans for salaried staffing cuts shortly after reporting
\nresults.<\/p>\n
Nissan will optimize inventory buildup in North America in the
\nsecond half of the company's fiscal year (October 1, 2024-March 31,
\n2025), including use of incentives, as well as maximize sales of
\nnew and refreshed models to right the ship. Weak US first-quarter
\nsales were blamed on an aging portfolio and consumer interest in
\nhybrids, which Nissan isn't currently offering in that market.<\/p>\n
\nnon-operating factors had an impact on operating results. VW says
\nthat adjusting for those factors, operating margin improved from
\nfirst quarter to second quarter.<\/p>\n
\nas sales fell on supply constraints. Porsche's operating revenue
\nand margin fell on costs for model ramp-up. Both Audi and Porsche
\nare introducing new products which affect costs today but leave
\nthem better positioned for the future.<\/p>\n
\ncompany noted restructuring efforts as the cause rather than market
\nconditions. For VW Group, there seems to be less turmoil on the
\nbalance sheet related to the BEV transition or the difficult market
\nin mainland China.<\/p>\n
\nthe year, its operating income took a significant hit. Ford is
\nstruggling to see the level of traction it wanted for the Ford
\nF-150 Lighting and Mustang Mach-E BEV products, and in 2024, Ford's
\nstory is about the “freedom of choice” the company can offer in
\npropulsion solutions.<\/p>\n
\nModel e electric vehicle division in 2024. However, the main reason
\nfor the division's decline in first-half 2024 performance was
\nunexpectedly high warranty costs in the second quarter, along with
\nhigher costs for new-product materials and manufacturing.<\/p>\n
\nthat it is profitable in mainland China and all of its
\ninternational regions.<\/p>\n
\nfall<\/strong><\/h2>\n
BMW and Mercedes-Benz both reflected lower sales and revenue,
\nwith Mercedes-Benz seeing larger declines in all four metrics.
\nThese companies noted industry conditions in mainland China
\nadversely impacting performance. Both brands are heavily
\nelectrifying, with BMW carrying a bit more breadth in its BEV
\nofferings at this point. The BMW purpose-built BEV Neue Klasse
\narchitecture arrives in 2025, causing increased engineering and
\ndevelopment spend in 2024.<\/p>\n
BMW leadership professed itself satisfied with the performance
\nof its core automotive unit in the first half of 2024, though BMW
\nhas experienced a harshening of the global operating environment.
\nThough BMW has vowed not to engage in the price war in mainland
\nChina, the automaker also noted weaker consumer sentiment in China
\nand heightened competition as drags on performance.<\/p>\n
Although BMW declined in all four metrics, the declines were
\nless severe than many others. For Mercedes-Benz, the comparatively
\nmore difficult quarter has led leadership to revise its
\nprofitability target for 2024, though the Mercedes-Benz Cars
\ndivision is still ahead of its margin goal of 10%.<\/p>\n
Mercedes-Benz Mobility division is being affected by ramp-up
\ncosts for the Mercedes-Benz charging network as well as the
\nchallenging market in mainland China.<\/p>\n
General Motors and Toyota report sales declines, but
\nimproved revenue and margin<\/strong><\/h2>\nGeneral Motors sales declined in the first half of 2024, but
\nstrong pricing improved revenue and cost discipline. The launch of
\nless-complex new-generation ICE vehicles contributed to a whopping
\n41.8% improvement in operating income and a 2.1-point increase in
\noperating margin.<\/p>\n
GM increased its full-year 2024 guidance, though the company
\nalso noted another delay in completing the conversion of a vehicle
\nassembly plant to build full-size BEV trucks to mid-2026. GM is
\nalso still struggling in mainland China; during the earnings call,
\nCEO Mary Barra said GM is working with its JV partner to
\nrestructure the business for sustainable profitability.<\/p>\n
Toyota reported an overall decline in first quarter sales,
\nincreased revenue, increased operating income and improved margin.
\nToyota improved its profit despite an ongoing issue in the Japanese
\nmarket over certifications, which has required vehicles to be held
\nand re-certified or recalled.<\/p>\n
Global vehicle sales dropped in the quarter on the interruptions
\nin Japan, with North America and Europe seeing sales improve.
\nToyota is strongly advancing hybrid technology in 2024, and
\nelectrified vehicle sales reached 43.2% of global sales for the
\ncompany.<\/p>\n
However, Toyota operating income was negatively affected by
\nincreased spending on higher labor costs and R&D expenses, both
\nrelatively typical items for the cyclical auto industry, while
\nincreased marketing efforts positively affected operating
\nincome.<\/p>\n
Tesla, Stellantis, Nissan see largest margin
\ndeclines<\/strong><\/h2>\nTesla's declining performance in the first half of 2024 is
\ndirectly related to sales declines and pricing actions. Adjusting
\npricing has not provided the sales lift the company wanted, but it
\nhas drastically affected gross profit and margin.<\/p>\n
Some of Tesla's sales struggles are related to natural consumer
\ndemand for BEVs beginning to take a slower growth pace than earlier
\nyears, but also related to fierce competition from technologically
\nadvanced startups, highly cost-efficient and sufficiently
\ncompetitive mainland Chinese BEV automakers, and highly competitive
\ncompetition from traditional brands. Tesla's financial results are
\nimpacted by economic conditions, BEV demand and a more complex and
\ncompetitive vehicle landscape.<\/p>\n
Though Stellantis did remain profitable, poor volume and mix
\nalong with currency translation pulled revenue down by 14%.
\nStellantis saw unadjusted operating profit fall about 51% and a
\nmargin decline of 5.9 points.<\/p>\n
Some volume decline was on discontinued models in North America
\nand inventory adjustments in Enlarged Europe. Stellantis
\ndifficulties in North America include inefficient marketing
\nstrategies and higher-than-necessary inventory growth.<\/p>\n
Stellantis is among the automakers who has long struggled in the
\nmainland China market. Moving forward, CEO Carlos Tavares is
\ncounting on a JV with Leapmotor to address mainland China as well
\nas to provide an inexpensive BEV for production and sale in other
\nmarkets, initially Europe.<\/p>\n
Nissan saw flat sales versus the April-June 2023 period, and
\nrevenue improved. However, Nissan's operating income plummeted
\ncompared with a year earlier and margin dropped. Nissan largely
\nblamed its North American performance for the weak result,
\nannouncing plans for salaried staffing cuts shortly after reporting
\nresults.<\/p>\n
Nissan will optimize inventory buildup in North America in the
\nsecond half of the company's fiscal year (October 1, 2024-March 31,
\n2025), including use of incentives, as well as maximize sales of
\nnew and refreshed models to right the ship. Weak US first-quarter
\nsales were blamed on an aging portfolio and consumer interest in
\nhybrids, which Nissan isn't currently offering in that market.<\/p>\n
\nstrong pricing improved revenue and cost discipline. The launch of
\nless-complex new-generation ICE vehicles contributed to a whopping
\n41.8% improvement in operating income and a 2.1-point increase in
\noperating margin.<\/p>\n
\nalso noted another delay in completing the conversion of a vehicle
\nassembly plant to build full-size BEV trucks to mid-2026. GM is
\nalso still struggling in mainland China; during the earnings call,
\nCEO Mary Barra said GM is working with its JV partner to
\nrestructure the business for sustainable profitability.<\/p>\n
\nincreased revenue, increased operating income and improved margin.
\nToyota improved its profit despite an ongoing issue in the Japanese
\nmarket over certifications, which has required vehicles to be held
\nand re-certified or recalled.<\/p>\n
\nin Japan, with North America and Europe seeing sales improve.
\nToyota is strongly advancing hybrid technology in 2024, and
\nelectrified vehicle sales reached 43.2% of global sales for the
\ncompany.<\/p>\n
\nincreased spending on higher labor costs and R&D expenses, both
\nrelatively typical items for the cyclical auto industry, while
\nincreased marketing efforts positively affected operating
\nincome.<\/p>\n
\ndeclines<\/strong><\/h2>\n
Tesla's declining performance in the first half of 2024 is
\ndirectly related to sales declines and pricing actions. Adjusting
\npricing has not provided the sales lift the company wanted, but it
\nhas drastically affected gross profit and margin.<\/p>\n
Some of Tesla's sales struggles are related to natural consumer
\ndemand for BEVs beginning to take a slower growth pace than earlier
\nyears, but also related to fierce competition from technologically
\nadvanced startups, highly cost-efficient and sufficiently
\ncompetitive mainland Chinese BEV automakers, and highly competitive
\ncompetition from traditional brands. Tesla's financial results are
\nimpacted by economic conditions, BEV demand and a more complex and
\ncompetitive vehicle landscape.<\/p>\n
Though Stellantis did remain profitable, poor volume and mix
\nalong with currency translation pulled revenue down by 14%.
\nStellantis saw unadjusted operating profit fall about 51% and a
\nmargin decline of 5.9 points.<\/p>\n
Some volume decline was on discontinued models in North America
\nand inventory adjustments in Enlarged Europe. Stellantis
\ndifficulties in North America include inefficient marketing
\nstrategies and higher-than-necessary inventory growth.<\/p>\n
Stellantis is among the automakers who has long struggled in the
\nmainland China market. Moving forward, CEO Carlos Tavares is
\ncounting on a JV with Leapmotor to address mainland China as well
\nas to provide an inexpensive BEV for production and sale in other
\nmarkets, initially Europe.<\/p>\n
Nissan saw flat sales versus the April-June 2023 period, and
\nrevenue improved. However, Nissan's operating income plummeted
\ncompared with a year earlier and margin dropped. Nissan largely
\nblamed its North American performance for the weak result,
\nannouncing plans for salaried staffing cuts shortly after reporting
\nresults.<\/p>\n
Nissan will optimize inventory buildup in North America in the
\nsecond half of the company's fiscal year (October 1, 2024-March 31,
\n2025), including use of incentives, as well as maximize sales of
\nnew and refreshed models to right the ship. Weak US first-quarter
\nsales were blamed on an aging portfolio and consumer interest in
\nhybrids, which Nissan isn't currently offering in that market.<\/p>\n