Toyota will still be #3 in cars made this year, but in terms of profitability, it has become an also-ran. Toyota shares that fate with their Japanese peers at Nissan and Honda. The Nikkei[sub] tabulated yen-denominated group earnings of 10 major automakers worldwide for the July-September quarter and comes to the conclusion:
“Japanese automakers trailed German, U.S. and South Korean rivals in net profit for the July-September quarter, highlighting Japanese carmakers’ struggles.”
Q3 Net Profits Of Major Automakers
| Rank | Group | Billion JPY | Billion $ |
| 1 | Volkswagen | 732.0 | 9.4 |
| 2 | Daimler | 141.5 | 1.8 |
| 3 | GM | 134.6 | 1.7 |
| 4 | Hyundai | 134.2 | 1.7 |
| 5 | Ford | 128.6 | 1.7 |
| 6 | BMW | 112.6 | 1.4 |
| 7 | Nissan | 98.4 | 1.3 |
| 8 | Toyota | 80.4 | 1.0 |
| 9 | Honda | 60.4 | 0.8 |
| 10 | Tata | 28.1 | 0.4 |
Japanese carmakers were hit by a double whammy: The March 11 tsunami destroyed large parts of auto production, not just in Japan, but worldwide. The soaring yen makes exports unprofitable and makes foreign profits look smaller once they hit the books in Japan.
The whole year will be a dark year for Japanese automakers. However, not making a loss under these circumstances can be something to be grateful for.
The are also losing out on grabbing market share in the ever important Chinese market. Toyota and Honda sales are down for Nov while GM is up a whopping 40,000 Units or 20.4% to 237,000.
Bertel:
I’m very interested in your analysis – or based on the analysts/experts you’ve talked to. For Nissan, Honda and Toyota each…
How much of the financial woes is due to a strong Yen?
How much of the financial woes is due to the earthquake/tsunami and directly related issues to access to electricity and supply chain?
How much of the financial woes is due to problems in Thailand?
Is there any measurable impact on some of the product mix woes (Civic launch woes, Corolla update being phoned in for North America); or do the three above play a vastly bigger role?
What do you think as the expert in that region for TTAC restores Japan to its former profit glory? A weaker Yen? Play catch up post earthquake? Thailand drying out? All of the above? I’m being too simplistic?
Thanks!
the gestation of even a mild update to the Corolla started long before any earthquakes.
Also, i’d look at total sales numbers as a better indicator of their product mix woes rather than profitability.
I did not talk to analysts. Talking to the manufacturers themselves, they say that they can cope with tsunamis, floods, earthquakes etc., but that the yen is the biggest evil of them all. They feel helpless, and are about to pack in if nothing changes. I feel the tension rising.
Thanks!
“The Mach 11 tsunami”
Wow, that’s one fast tsunami!
Tsunami, tsunami, tsunami..
Does Nissan include Renault? Isn’t Renault the daddy?
Why does Volkswagen care abount being number one in sales? Wolfsburg should stay with what works right now – VW is as profitable as the rest of the top ten combined!
Yeah, that really shocked me. I had no idea they were that much more profitable.
It,s the Volkswagen group,
-Porsche
-Audi
-Bentley
-Bugatti
-Lamborghini
-SEAT
-Skoda
-Volkswagen
Interesting that Hyundai is up there selling fewer cars and with far fewer high margin luxury sales. Also considering their entire lineup is new and has to be paid for (unlike the new Civic, Corolla, Camry and all the old Nissan models etc)
And both Mulally and Ford, Jr. (what does he do?) made TWICE as much as the CEO of VW last year.
Too much of profits end up going to the top execs in US companies instead of to the shareholders.
It’s Bill’s company. And, without Mr. Mulally, it’s quite arguable that there wouldn’t *be* a Ford today. So, i think they earn their salaries.
Oh the inequity!
That’s so unfair!
BOO-HOO!
Worse yet…
Austria gets listed before Belgium on country listed alphabetically!
A dollar bill floats, but a dollar in change doesn’t!
Romney is a Mormon, but Gingrich had the wives!
Louis Chevrolet never drove a Corvette!
Some people earn more money than other people doing similar jobs!
Some guys go bald before they are 40, but women rarely do!
Girls can’t join Boy Scouts even though they know how to burn people and not bathe.
Sometimes I get phone calls from people I don’t know by accident!
It snows more in Alaska than in Arkansas, even though both states begin with the letter “A” and are in the same country!
Rio gets the Olympics over Chicago even though they have the same crime rates!
Hybrids and watches both have batteries in them, but hybrids cost more!
To be fair – VW did have a huge special effect in their net profits, due to some Porsche Stock options that are now accounted for differently (don’t ask me about details), now that the merger has been postponed. That did put a few billion dollars into VW’s net profit. Porsche is on the other end of that stick – due to the postponed/halted merger, they had to announce a 3.7 billion € special effect, that put their net income into the negative, even though their operations are extremely profitable.
Usually comparing operating profit imho gives a clearer view of a “carmakers” momentary profitability. Though at the end, the real number counts, it is quite often very distorted (just look at the up-and-down of Porsches net, while the operating was always very high…)
Anyway, I googled some figures, if anyone cares. Exchange rates as of today, so take those with a grain of salt as well ;):
VW – 3.87 billion $
Daimler – 2.64 billion $
BMW – 2.4 billion $
GM – 2.2 billion $ (theirs is called EBIT-adjusted though – what is it adjusted for?)
Porsche (not included in VW’s numbers) – 2 billion $
Nissan – 2 billion $
Ford – 1.9 billion $
Hyundai – 1.7 billion $
Toyota – 1 billion $
The changes in position aren’t that dramatic, but the numbers do change quite a lot. And Porsche goes from losing 700 million $ in net income to a nice 2 billion $ in Operating Profit…
3 Q EBIT (operating profit) : 2.2 B
Interest income +112M
Automotive interest expense -101M
Income tax expense -107M
=Net income attributable to stockholders 2.1B
cumulative dividends on preferred stock -215M
earnings allocated to Series B Preferred Stock participating security -166M
=Net income attributable to common stockholders $ 1.7B
Operating income for the first 9 months is 8.7B vs 6.1B same period last year. Net income is 7.1B vs 4.1B last year. The tax expenses of course will be recouped next year thanks to Uncle Sam giving them a[illegal] 14B Tax break.
Toyota’s operating profit for the same period is around 1.6B.
Cost of quake – 110B yen
Cost of high yen – march 31 10 to March 31 11 – 290B yen
Cost of high yen – April 1 11 – Sep 30 11 – 130B yen
Losses due to domestic operations- last 6 months – 275B yen
comparing operating profit imho gives a clearer view of a “carmakers” momentary profitability
Agreed. That makes perfect sense.
It’s also possible that some apples-to-oranges comparisons are being made here. The US uses GAAP accounting rules, while IFRS is used elsewhere. R&D is expensed under GAAP rules, while it is partially expensed and partially capitalized under IFRS. Therefore, companies with high R&D budgets that use IFRS should report higher net incomes than they would if they used GAAP, all things being equal.
I forgot to mention this yesterday, but besides the accounting standards (and there are far more differences then the one you cite, so I’d not be that sure that your conclusion automatically applies), the big problem with comparing Operating profits of course is China.
Building and selling China is very much something one would normally think of as “operative”, yet it is not included in the numbers I’ve posted above. Thats why “only” comparing the operating profits also isn’t sufficient – VW’s “share” in the operating profits of the chinese JV’s in Q3 2011 would be another 1 billion $, or 2.5 billion $ in 2011 Jan-Sept…
Toyota is not even half of GM?
Like you mentioned about what GM’s defintion is sometimes, well it depends on the circumstance asnd time of the year. personally don’t like snap shots for that reason.
1) It’s hard not to turn a $1.7B profit when you just had a $50B bailout.
2) GM will keep turning “operating profits” until they need bailout again, because their liability to the UAW is not considered opertating cost but they need to pay it!
Just to add, GM’s so called “profit” is nothing but creative accounting that kicks the can down the road. They will keep posting “operating” profits, until they have to post a “one time charge (loss)” caused by their pension/medical etc. They say they make money on cars, by cheap leases and over-estimating residual value at lease end. And then they will post another “one time charge”. It’s legal accounting. But it doesn’t mean they are any different than the old GM or make any money.
It’s all legalized smoke and mirrors. Every company has dozens of tricks up their sleeves to make the picture look better, or worse, depending on their requirements.
The only thing that has changed is that the Japanese Treasury is bust. The cost of the March 2011 could top 1 trillion dollars. Who has that kind of money laying around? Japan Inc is crying and stomping their feet like a 3 year old baby in a shopping mall.
Regardless of whether or not Europe slips over an abyss next year or no, Japan’s days as an export colossus are over.