Editor’s Note: This feature is taken from the European editions of Motor1.com. Thus, the values on the images are indicated in euros. Where appropriate in the text of the article, we have converted the euro into US currency.
The unprecedented challenges faced by the automotive industry in 2021 led to an unprecedented bottom line for most OEMs in Europe, the United States, Japan and South Korea. This is the first and perhaps the most surprising conclusion of a detailed study of the financial reports of 19 automakers around the world. Fewer cars were sold than before the pandemic, but profits still increased.
According to the financial statements of Aston Martin, BMW Group, Daimler, Ferrari, Ford, Geely Group, General Motors, Honda, Hyundai Motor Group, Isuzu, Mazda, Renault-Nissan, Stellantis, Subaru, Suzuki, Tata Group, Tesla, Toyota , and Volkswagen Group, revenue totaled $1.89 trillion. That’s a 13% increase from 2020, but a 6% drop from 2019. Interestingly, the total number of units sold didn’t follow the same pattern.
In 2021, these companies sold 69.54 million vehicles, which is 2% more than in 2020 and 14% less than in 2019. This means that automakers have raised prices or reduced discounts during the year. This bizarre trend of units sold versus profit is partly explained by the lack of new cars available due to the shortage of chips. Fewer cars available combined with higher demand following COVID lockdowns have driven prices up.
Indeed, the average revenue per unit sold in 2021 was $27,270, up 11% from 2020 and 10% from 2019.
Focus on the most profitable segments
Further down the financial statements, operating profits revealed another interesting fact. Despite the impact of the pandemic on global economies and the resulting supply chain issues for the automotive industry, these 19 OEMs have made more money than in 2020 and 2019. Profits from business operations (total revenue minus production costs and selling/administrative expenses) amounted to $143.97 billion in 2021.
In other words, for every $100 in sales, these companies managed to keep $7.60 in profit.
By contrast, in 2020, that figure was only $3.60 per $100 of sales. This likely reflects the peak of the pandemic in 2020, as in 2019 operating profit was $5.10 per $100. The increase also looks impressive when comparing total operating profits to the total number of cars sold.
As such, from a revenue per vehicle sold perspective, it went from $1,270/car in 2019 to $892 in 2020, then skyrocketed to $2,069 last year.
Focusing on SUVs and electric vehicles has helped these OEMs offset significant losses from other internal combustion vehicles such as sedans. As the supply of semiconductors dwindled, they took what was available and injected it into the most profitable vehicle lines, keeping those assembly lines running while other models less profitable were wasting away.
Ferrari is the cash cow of the industry
Of all the brands, Ferrari continues to be by far the most profitable automaker. Its operating margin fell from 21.4% in 2020 to 25.5% last year. Based on the numbers, the company earned $106,078 per unit sold in 2021. In a distant second place was Tesla, earning $6,693 per vehicle.
The author of the article, Felipe Munoz, is a specialist in the automotive industry at JATO dynamics.