OEM’s global profits return to growth in Q3 2020

It seems that the worst of the COVID crisis is gone. This would be the first conclusion from the latest financial results published by the world’s biggest car makers. According to the figures for Q3 2020, the industry returned to growth as profits increased by 3% compared to Q3 2019.

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Although it is a very small increase, the result is totally different from the big loses registered in Q2, when the car makers lost €13.85 billion. During the third quarter, the 25 OEMs* that released profits information posted operating profits of €22.88 billion. The best side of the story is that only 7 of these companies lost money during the period.

The results confirm the recovery trend that we have observed since the end of August. As the second wave started to hit Europe, and the US and Latin America continued to deal with the problem, the industry has proved to rapidly adapt to the changing conditions of the markets. Better deals, lower inventories, and more cooperation with the governments seem to be the formula to better face the outbreak.

Fewer cars, more profits

The 25 OEMs sold 16.7 million vehicles in Q3, down by 6% compared to the same quarter in 2019. In contrast to the profits by OEM, only 6 companies saw increased in their volumes, with Tesla leading the way. In fact, the Silicon Valley’s company is one example of how the current crisis is boosting the shift from ICE to pure electric cars. Part of its success is closely linked to the local production of the Model 3 in China. The sales volume in this country counts for 39% of the global total through November, and becoming the biggest market, ahead of USA.

Despite the sales volume drop, these OEMs earned more money, meaning that they have improved their sales mix, reduced costs and drop some of the big incentives packages they had during the worst part of COVID-19 outbreak. In fact, overall operating margin improved in Q3, jumping from 5.19% in 2019 to 5.87% in 2020.

Ferrari is back in the game

The better situation has put Ferrari back in the game. After posting a 4% operating margin in Q2 2020, the Italian super-car maker improved its profitability to 25% during the last quarter. Although they sold fewer cars (-6.5%) compared to Q3-19, the operating profits fell by only 2.2%. Ferrari shows its financial solidity once again thanks to the continuous updates of its lineup, the big awareness, and its loyalty to its core values. The question is whether the coming Ferrari SUV is due to respect these values or not.

* Aston Martin, BMW Group, BYD, Daimler, FCA, Ferrari, Ford, GM, Great Wall, Honda, Hyundai, Isuzu, JAC Motor, JLR, Kia, Mazda, McLaren, Mitsubishi, Nissan, Subaru, Suzuki, Tata, Tesla, Toyota, Volkswagen Group released both revenue and profits/loses results. Renault Group and PSA released revenue results only. Geely and Volvo did not release Q3 results. The rest of Chinese OEMs not included in this article correspond to societies that build cars for their own and for third parties.

*All values in Euro. Exchange rates from GBP, CNY, USD, JPY, KRW, INR, SEK on 30/09/2019 for Q3 2019 and 30/09/2020 for Q3 2020.