Toyota: Sales Dip, But Profit Rises
Toyota Motor, the world’s top-selling automaker, reported a 17% increase in first-quarter profit. Despite lower sales and a decline in production, cost-cutting measures and a weaker yen helped offset the losses. The operating profit for the three months through June reached 1.3 trillion yen ($8.70 billion), in line with analyst estimates. However, the growth was the weakest in seven quarters, disappointing investors. Toyota’s share price fell almost 9% on Thursday, reflecting concerns about the tough market in China and the fallout from a certification scandal. Retail sales of Toyota and luxury Lexus brand cars declined 2% in the quarter, with petrol-electric hybrids accounting for about two-fifths of sales. Toyota maintained its full-year profit forecast of 4.3 trillion yen.
VW: Mixed Results, Cost-Cutting Imperative
Volkswagen Group reported mixed results and a downbeat forecast, highlighting the challenges faced by multinational automakers in a changing marketplace. The company’s second-quarter revenue of €83.339 billion ($90.0 billion) was slightly higher than estimates, but operating profit dropped by 2.4% compared to the same period last year. The operating margin fell to 6.6% in the quarter, below expectations. VW acknowledged the impact of unplanned items like severance payments and higher fixed costs on its operating results. The automaker saw growth in North and South America, but China posed challenges. In order to achieve targets, VW stressed the need for significant cost-cutting efforts in the second half of the year. The company recently announced a partnership with Rivian to develop next-gen software-defined vehicles, and it confirmed that its ID.7 EV sedan would not be released in the U.S.
Ferrari: Surpassing Expectations, Personalization Drives Growth
Ferrari reported better-than-expected second-quarter results and raised its full-year expectations. The Italian automaker saw adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) rise to at least 2.50 billion euros ($2.70 billion) this year. Ferrari attributed its strong performance to pricier models like the Daytona SP3 and increased demand for personalized vehicles. The company generated 121 million euros of cash in the quarter, and pricing power contributed 122 million euros to earnings. Ferrari’s focus on personalization, both inside and outside the car, has played a significant role in boosting revenue. In 2023, personalizations accounted for around 19% of the company’s total revenue.
BMW: China Challenges, Strong Demand for EVs
BMW reported lower-than-expected profit margins in its core automotive segment in the second quarter, impacting its shares. Increased competition and weaker demand in China have posed challenges for the German automaker. BMW’s earnings before interest and tax (EBIT) margin fell to 8.4% from 9.2% in the same period last year. However, it outperformed Volkswagen and Mercedes in the Chinese market, with a 4% decline in sales compared to their larger slumps. BMW is seeing strong demand for its all-electric models, setting it apart from its rivals. The company considers e-mobility the core drive technology of the future and its primary growth driver. BMW and its brands Mini and Rolls-Royce increased sales of purely electric cars by a quarter in the first half of the year.
Carvana: Beating Forecasts Amid Falling Used Car Prices
Carvana, the online used car retailer, exceeded expectations and forecast annual core profit above Wall Street estimates. The company’s shares surged nearly 15% following the announcement. Carvana has positioned itself well to capture market share as automotive shopping moves online. Despite navigating bumpy vehicle demand and a decline in used vehicle prices, Carvana’s pre-owned car demand has been improving. The company expects adjusted EBITDA between $1 billion and $1.2 billion for 2024, surpassing analysts’ estimates. As more car buyers consider online shopping, Carvana has adapted its strategies to succeed in the changing market.
