Even with Poor Production and Lower Sales... Completed Car Manufacturers All Earned Handsomely

Global Automakers' Q1 Performance
Production, Supply, and Customer Deliveries Decline but Profitability Rises
Increase in Sales of Expensive Cars and Reduced Promotion Costs
'Supplier-Driven' Market Continues... Price Increases Also Easier

Toyota, the world's largest automaker with record-high sales, operating profit, and net profit last year, has a store in Tokyo.

[Asia Economy Reporter Choi Dae-yeol] German high-performance car brand Porsche reported an operating profit of 1.47 billion euros in the first quarter of this year, marking an increase of about 17% compared to the same period last year. The operating profit margin rose by 2 percentage points to 18.2% from a year ago. This achievement was made despite adverse conditions such as a decrease in vehicles delivered to customers compared to the first quarter of last year due to the impact of the Russian invasion and other factors.

Luxury brand Bentley also saw a decline in sales volume in the first quarter of this year, but profitability improved significantly. The first quarter operating profit increased by 162% compared to the same period last year, reaching 170 million euros. Lamborghini, another high-performance brand based in Italy, also recorded an increase in operating profit that exceeded the increase in sales revenue in the first quarter of this year, continuing its record-breaking performance from last year.

The 'performance feast' is not limited to luxury brands. Hyundai Motor Company saw a global sales volume decrease of about 10% in the first quarter of this year compared to the previous year, yet sales revenue increased by 10% and operating profit by about 16%. Notably, the quarterly operating profit approached 2 trillion won, the highest level in eight years. Kia posted an operating profit of about 1.6 trillion won, setting a record for the highest quarterly operating profit ever.

Last month, a large part of the yard at Gwangju Global Motors was empty. The yard is empty as the factory producing the compact car Casper temporarily halted operations due to parts supply difficulties.

Toyota's sales, operating profit, and net profit for last year (April 2021 to March 2022) also reached the highest levels since the company's establishment. Stellantis, based in North America and Europe, reported a first-quarter net profit of 41.5 billion euros, an increase of about 12% compared to last year.

Although the degree varies, the common background behind the strong performance of major automakers is similar. The often-mentioned 'product mix improvement' means selling more profitable cars, i.e., more expensive cars. Including luxury brands, more expensive eco-friendly vehicles such as electric and hybrid cars, and higher trims of the same models were sold in greater numbers, boosting profitability.

The strong dollar also contributed significantly through favorable exchange rate effects. Hyundai, Kia, Toyota, and others export a large volume of domestically produced vehicles overseas, so as the exchange rate rises, they receive more money for the same products. In Kia's case, a 1 won change in the won-dollar exchange rate affects profits by about 22 billion won.

Model 3 displayed at Tesla store in LA, USA

Increase in Sales of High-Profit Models and Favorable Exchange Rate Conditions
Supply Disruptions Maintain Supplier's Market Power... Promotional Costs Down
Raw Material Price Increases Easily Reflected in Sales Prices

Costs were also reduced. A representative example is the reduction of incentives in the highly competitive U.S. market among global automakers. According to industry sources, as of last month, the average new car sales incentive in the U.S. was about $1,466, down 7% from the previous month and more than 50% compared to the same period last year. In the U.S., manufacturers provide incentives to dealers to encourage new car sales, but due to increased demand and a shortage of production and supply, incentives have been eliminated or significantly reduced recently.

The problem lies ahead. The ongoing shortage of automotive semiconductors, which has lasted more than two years, is expected to continue throughout this year. Additionally, many automakers unanimously express concerns about management uncertainties due to soaring raw material prices caused by war and COVID-19 resurgence.

Nevertheless, as the 'supplier's market' is expected to continue for the time being, automakers are easily reflecting these cost increases in product prices. There is a clear trend that even if new cars are launched or model years are updated with significant price hikes, buyers still purchase them. Tesla, for example, changes prices of the same products from time to time, citing reasons such as delivery delays. This is why the global semiconductor shortage faced by the entire automotive industry is seen not as a negative factor but as a positive one.

This content was produced with the assistance of AI translation services.