“car companies around the world are under pressure and the current competitive environment is extremely severe, but we are still profitable.
” This sentence is Musk’s opening remarks at Tesla’s Q3 financial report meeting.
Having just handed out millions of dollars of red envelopes from American voters and got the good news of profits, Musk could hardly express his inner excitement.
In the face of the transcripts from July to September this year the feelings of the leaders of most car companies are mixed.
Arnault Antritz, Volkswagen’s chief financial officer, said the company’s results reflected the difficult market environment and had to slash costs and improve efficiency.
Nissan directly cut 9000 jobs and cut production capacity by 20 per cent after the latest results.
The Nippon Keizai Shimbun analyzed in detail the third-quarter results of 11 auto companies.
With the advance of electrification transformation, pioneers such as Tesla and BYD have made outstanding achievements, making it difficult for most traditional carmakers to take it easy.
Rush and backwardness, rise and labor pains, the whole industrial chain is experiencing a new round of differentiation.
Overall, of the 11 major car companies in the world, only Tesla and BYD achieved profit growth from July to September, up 17% and 11% respectively from a year earlier.
In addition, Toyota’s profits topped the list, but fell as much as 55 per cent year-on-year.
Nissan posted a final loss of 9.
3 billion yen and management took the initiative to cut wages.
and German manufacturers such as Volkswagen, Mercedes-Benz and BMW also saw profits fall by more than 50 per cent.
It is worth mentioning that Tesla ranks among the best in terms of bicycle profits with 690000 yen ahead of Mercedes-Benz’s 470000 yen more than three times that of Toyota’s 200000 yen.
The epicenter is in China, “Mercedes-Benz dropped 2 million yen.
” Nippon Keizai Shimbun expressed its shock at the reshaping of the industry order with eye-catching headlines in the face of sharp price cuts for luxury brands in the Chinese market (nearly 100000 yuan).
With China as the “source”, the global automobile industry is experiencing an unprecedented “big shock”.
With the help of electric transformation, Chinese companies such as BYD are rising rapidly and beginning to seize the market cake of traditional multinational car companies.
Even Mercedes-Benz, the representative of the once-glorious luxury car brand, had to put down its posture and exchange the volume with price.
According to GlobalData, a British research firm, the pure electric share of the Chinese market for new cars has grown from 10% in 2021 to 24% in 2024.
With the help of a series of subsidy policies, the process of electrification in China has advanced rapidly, while the proportion of sales of traditional fuel vehicles has fallen to 48 per cent from 80 per cent before.
In China BYD has become a major force in promoting the popularity of new energy vehicles.
In the third quarter of 2024, BYD’s global sales rose 38% year-on-year to 1.
13 million, including pure electric models up 3% to 440000 and mixed models up 76% to 680000.
In terms of global sales BYD jumped to fourth in the world from eighth in the same period last year surpassing automakers such as Ford Hyundai Honda and Nissan.
BYD’s strong market performance in recent years is unexpected by European, American and Japanese car companies, and as a competitor, everyone generally feels great pressure.
Compared with the same period in 2022, sales of Volkswagen and Mercedes-Benz fell by about 20%, Nissan by nearly 50%, and Honda by more than 50%, according to the Nippon Keizai Shimbun.
Honda Vice President Seiji Aoyama directly stated at the earnings meeting that the decline in the company’s industry was much faster than expected, and management must admit this.
It has also dealt a heavy blow to the public.
Volkswagen has been one of the leaders in the Chinese market for the past 40 years.
In particular, in 2017, China’s total car sales reached 28 million, making it the world’s largest producer and seller of cars.
Volkswagen Group’s annual sales in China also exceeded 4 million vehicles, accounting for 40 per cent of Volkswagen Group’s annual sales.
Volkswagen’s car sales in China fell 10.
2% in the first three quarters of this year, a decline that wiped out all the gains from sales growth in the rest of the world.
Not only that Volkswagen’s plight in China is affecting the world and the decline in sales of the whole group is the most intuitive result of a sharp drop in profits.
In response to the current difficulties, Volkswagen closed at least three factories in its German stronghold and proposed a restructuring plan to lay off tens of thousands of people.
Inventories in the United States have soared 1.
4 times, and North America has long been the most profitable market for Japanese cars, but growth has almost stagnated in the past third quarter except for the best-selling hybrids.
In the US market, the trend of inventory surge is becoming more and more obvious.
In order to reduce inventory, car companies have to provide more incentives to 4S stores or increase preferential car loan policies.
According to Cox Automotive, a research firm, the number of days in stock of new cars in the United States reached 81 days by the end of September 2024, up 40% from 58 days in August last year.
In order to sell cars, bicycle incentives have also continued to rise, reaching as much as $3500 at this stage, an increase of 50 per cent year-on-year.
In fact the incentive fund was launched in the North American market and Japanese car companies frequently stimulated consumption in the United States as early as around 2021 when the COVID-19 epidemic was at its peak.
According to the Nippon Keizai Shimbun, due to the lack of hybrid models in North America, Nissan’s inventory has reached 105 days, and the incentive payment has increased to more than $4500, but it is still bound to lose money.
In the short term the plight of the North American market has further deepened Nissan’s downturn.
In the North American market, sales of pure electric models are slowing, while sales of hybrid vehicles are growing.
Nissan has given priority to pure electric models in North America, and the competition is very passive.
According to Nissan’s 10 best-selling models in the United States, only one new car was released in 2022 and 2023, and the number of best-selling models decreased due to delays in new car updates, resulting in a monthly sales of more than 1000 cars.
it has fallen from 19 in 2014 to 12 now.
As there is a shortage of hot-selling new models and pure electric models face sales resistance Nissan has no choice but to rely on sales incentives and subsidies after price cuts leading to a sharp drop in profits.
Toyota fared slightly better thanks to several competitive hybrid models with 33 days of inventory in the United States and an incentive payment of about $1450.
It is worth mentioning that North America has always been Honda’s “profit cow”, and it is precisely this market that has become more robust, allowing Honda to achieve remarkable results in the past six months.
Not only are sales of fuel-fueled cars and hybrids strong, but even pure electric models are up 64000 from the same period last year.
The profit problem behind the high investment is not only the pressure of market sales but also the huge burden of electric investment.
Tang Weizhen, CEO of Stellantis, said in an interview with the Financial Times that the long-term transformation of electrification will be a huge trap for automakers.
The dual investment in fuel vehicles and electric vehicles will lead to a cliff in profitability.
decline.
, ,”Nihon Keizai Shimbun” learned that in the current market environment, it is difficult to increase income significantly.
When profitability declines, the development of new cars and new technologies is easily limited.
, Honda plans to invest 10 trillion yen in electrification and software development by 2030.
However, in the past third quarter, high research and development expenses directly reduced Honda’s operating profit by 53 billion yen.
Considering the huge cash pit of the transformation of the new four modernizations, General Motors has postponed investment in an electric pickup factory twice and re-examined its set goal of producing 1 million electric vehicles by 2025.
Ford has revised its strategy in practice and has decided to re-examine the research and development of large electric vehicles and focus on electrification investment in small vehicles.
, , ,QUICK FactSet statistics show that from July to September 2024, the sales revenue of 11 global auto companies only reached a profit margin of 3.
8%, a decrease of more than 3 percentage points compared with 7% in the same period last year.
Among global companies, Tesla and BYD, which have outstanding profit performance, have common ground in terms of profit.
“Nihon Keizai Shimbun” believes that since its founding, Tesla has focused on the research and development of pure electric vehicles and has no burden from the era of fuel vehicles.
BYD once used battery manufacturing as its business center in the early stage, which was the core asset of the era of electric vehicles.
Today, both companies have entered a harvest period for electrification investment.
, In addition to China, other emerging markets are also putting pressure on multinational car companies.
China car companies are accelerating their “going out to sea” and are shifting domestic production capacity to exports.
As Nissan boss Makoto Uchida said at the earnings conference, the business of Japanese companies in Southeast Asia, the Middle East and South America is also influenced by China’s forces.
Within the industry, the automobile industry is also experiencing a “smiling face curve” phenomenon, which is similar to the former electrical and other industries.
The so-called “smiling curve” of the automobile industry, that is, the added value of the industry and profitability, is gradually shifting to the upstream and downstream of the industrial chain.
For example, vehicle software is becoming a key factor affecting vehicle functions.
Software-defined vehicles (SDVs) have been deeply rooted in the hearts of the people.
In order to seize the intelligent market, automobile companies have either developed themselves, invested in shares, or joined forces to strengthen cooperation to open up new opportunities at the software level.
This is a prerequisite for the long-term influence of automobile companies in the new era.
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