In 2020, the novel coronavirus pandemic dealt a severe blow to the automobile industry. Many car factories around the world have been forced to close because of consumer travel restrictions, and the decline in car sales is a natural result. Last year, global car sales, including passenger cars, pick-up trucks and light commercial vehicles, fell 13 per cent from a year earlier to 78.35 million, the lowest level since 2011.
Regionally, China is still the world's largest single car market, accounting for 33% of the global market share, but car sales in China also fell slightly last year. Light vehicle sales in the United States fell 14% year on year, the lowest since 2012. The United States and Canada accounted for 21 percent of the global auto market last year. Car sales in Europe fell 24 per cent year-on-year, the biggest drop in 30 years, with Europe-Turkey accounting for 19 per cent of the global market last year.
The downturn of the three main markets in the world has directly affected the operating performance of automobile companies. According to the 2020 results of 20 major international car companies, only four companies, Daimler, GM, Tesla and Jaguar Land Rover, achieved year-on-year growth in operating profits, while the others showed more than double-digit declines. In terms of revenue, almost all car companies have declined compared to 2019, with only Tesla outshining others, achieving a year-on-year increase of 29%. In terms of profit margins, Ferrari topped the list with 20.7%.
In 2020, Toyota Motor Group ranks first among the world's mainstream automakers in terms of sales volume and operating profit. Last year, Toyota's annual sales (down 11.3% from a year earlier to 9.528 million vehicles) surpassed its German rival Volkswagen Group (down 15.2% to 9.305 million vehicles), winning the top spot again after five years, with an operating profit of more than $17.3 billion, surpassing Volkswagen ($12.64 billion) by nearly $4.7 billion. But Volkswagen still ranks first among the world's mainstream automakers in terms of revenue, with $265.72 billion, followed by Toyota with $243.73 billion. Both Toyota and Volkswagen recorded double-digit year-on-year declines in revenue and operating profits compared with 2019.
Tesla is still an outlier and the only car company with significant growth in revenue and profits in 2020. Last year, Tesla's revenue reached US $31.536 billion, up 29% from the previous year; gross profit was US $6.63 billion, an increase of 63% over the same period last year; adjusted profit before interest and tax was US $5.817 billion, an increase of 95% over the same period last year; net profit belonging to common shareholders was US $721 million, compared with a loss of US $862 million the previous year; and the gross profit margin of the automobile business was 24.1%. Free cash flow was $2.786 billion, up 158 per cent from a year earlier.
Tesla expects that the company's operating profit margin will continue to grow and will reach the industry-leading level with smooth capacity expansion and localization plans. In addition, Tesla said there is enough cash to support product planning, long-term capacity expansion plans and other expenses.
While the market is actively focused on the future of Tesla and other electric carmakers, traditional carmakers such as Daimler, Volkswagen, BMW and GM amassed large amounts of cash at the end of last year. In a year hit by the epidemic, carmakers consumed a lot of cash to maintain fixed costs and working capital, and it is worth mentioning that they were able to end the year with strong free cash flow.
Daimler, BMW and Volkswagen generated 13.3 billion euros ($16.1 billion) in free cash flow in the fourth quarter of last year alone, according to Bernstein analyst Arndt Ellinghorst. "Old-school auto analysts and investors do not believe in the sustainability of earnings and cash flow, while investors in new automotive technologies do not believe in the electric vehicles and software features of traditional car companies," Ellinghorst said in a report. We believe that both sides will be proved wrong. "
The difficult 2020 has passed, but the epidemic continues, coupled with the impact of chip shortages, 2021 will be another difficult year for the global auto industry. Alix Partners, a consultancy, expects global carmakers to lose $14 billion in revenue in the first quarter of this year and $61 billion in 2021 due to supply chain disruptions caused by novel coronavirus and a shortage of semiconductor chips. GM expects the problem to reduce its free cash flow by $1.5 billion to $2 billion this year, which Ford says could reduce its profit by $1 billion to $2.5 billion in 2021.
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