European OEMs: 2013 results and 2014 outlook

Record sales in 2013 for German OEMs; PSA and Renault's new management plan

2014/04/02

Summary

 The three German automakers achieved a new sales record and are aiming higher results in 2014. Fiat acquired the remaining shares of Chrysler and established Fiat Chrysler Automobiles (FCA) in January 2014, converting them to the world’s seventh largest automotive company. The French makers have launched their business plans in 2014; Renault plans to further enhance partnership with Nissan to integrate core functions; PSA intends to strengthen their global business. This report outlines the business performance of the six major European automakers in 2013 and also provides their market forecasts as well as their targets and strategies for 2014.

Related Reports:
FCA: Fiat completes full acquisition of Chrysler (Mar. 2014)
Daimler: new models boost car sales to record highs for 2013 (Nov. 2013)
BMW to break sales record in 2013 (Nov. 2013)
VW boosts production in key markets in North America and China (Aug. 2013)
PSA looks to break its dependence on Europe by expanding into emerging markets (Jul. 2013)
FIAT lays out strategy to break-even in Europe by 2016 (Jun. 2013)
Renault strives for positive operating margin for the automotive division (May. 2013)

Highlights of 6 European OEMs

6 Euro OEMs comparison   Total unit-sales in 2013 for all six of the major European auto makers combined, namely PSA、Renault, FCA, VW, BMW,and Daimler, was over 23.83 million units, a year-over-year (y/y) increase of 3.4%. Only PSA, which sold 2.82 million units, reported a y/y sales decline. All of the other makers reported y/y sales increases. In fact, during 2013 all three of the German companies broke their previous global sales records. BMW, for the 9th consecutive year, was the world’s market leader in terms of unit-sales in the premium car market. However, the premium-car leader in the world’s major automotive market, the USA, was Mercedes Benz.
 
 When looking at each company’s business performance in monetary terms, we noted the following. Daimler’s net profit jumped 27.7% y/y, reaching EUR 8.72 billion, and BMW’s net profit rose 4.5% y/y, reaching EUR 5.34 billion. VW reported a tremendous 58.2% y/y drop in net profit to EUR9.15 billion in 2013. However, it should be taken into account that the VW Group’s 2012 business results included a huge profit gained by valuation through acquiring Porsche in the same year. Fiat, after finally acquiring all shares in Chrysler in January 2014, established itself as Fiat Chrysler Automobiles (FCA). In 2013, FCA’s net profit was EUR 1.95 billion. However, if Chrysler’s business results had been excluded, FCA by itself would have ended up EUR 910 million in the red. Renault’s net profit drastically fell 59.4% y/y to EUR 695 million, being negatively impacted by costs associated with cutting its workforce at its facilities in France and withdrawing its business operations from Iran. PSA, the only company to report an operating loss, posted a net operating loss of EUR 2.32 billion, which actually was a 50% reduction in its loss y/y due to successfully adding to and improving its vehicle lineup and reducing costs.

 All of the companies forecast that the automotive market will rise in line with an overall economic recovery in Europe during 2014. They also forecast that markets outside of Europe, such as North America and BRICs, will also see higher demand. However, the actual increase rate in these markets will be slightly less in 2014 than it was in 2013.
  Separately, the forecast for automotive production in France through 2017 by LMC automotive is provided at the end of this report.

2014 Outlook by the Six European OEM

PSA In 2014, demand in Europe will rise 2% and will grow 10% in China. On the other hand, demand in the Latin American market will shrink 2%.
Renault The company predicts that the European market will begin to stabilize in 2014. The company predicts that emerging countries such as China will see growth, however it predicts that there will be a degree of uncertainty in the market
FCA In the NAFTA market, the company sees greater sales in the USA and Canada in 2014; however, the rate of growth will be a lower percentage than that achieved in 2013. Brazil in the Latin American market is predicted to see growth; however, Argentina will see unit sales decline by two digits due to import restrictions. The company forecasts that it will sell a greater number of units in the Asia/Pacific region due to rising demand in China and India. Nevertheless, the company is concerned that unit sales will fall in Japan. As for demand in Europe, the Middle East, and Africa, the company predicts a 3% y/y increase in Italy, and a 4% increase in Germany for 2014. However, growth in Europe as a whole (the 27 EU countries and the EFTA countries), is predicted to increase by only 0.5%, which is basically the same level of business performance as in 2013.
VW In terms of demand in the global passenger-car market, the company says that demand is somewhat recovering in Western Europe, with sales in the German market showing a recovery. The company predicts that demand will be only slightly greater in Central and Eastern Europe. In North America, the company forecasts that the increase in demand seen in 2013 will slow slightly, and that demand will be basically the same level as it was  in South America in 2013. Demand in Asia/Oceania will continue to increase; however the rate of increase will not be as robust as it was in 2013.
BMW The company forecasts that overall demand in the global passenger-car market will recover, growing 4.7% on average y/y. It predicts that demand in the USA will rise 3.6% and that demand in China will rise 10.1%. Even in Europe, the company sees a 1.4% rise in Germany, a 2.8% rise in France, and an 8.7% rise in Italy y/y. The company fears that demand will shrink 13.4% y/y in Japan due to consumption-tax hike. Demand in Brazil is predicted to grow 3.3% and in India, 2.0%.
Daimler Daimler predicts that passenger-car demand in 2014 will rise 4-5% y/y, stating that North America will experience an increase in demand and the economy in Western Europe will recover. As for emerging-market countries, demand will be lower except in China. The company expects that demand for mid-sized and heavy-duty trucks in 2014 will grow 10% at the maximum in the NAFTA market. Even though Euro 6 emission legislation will dampen demand in Europe, the company predicts this lower demand will be offset in proportion to a predicted rise in demand driven by the economic recovery taking place in the region.

Sources: The OEMs' press releases and annual reports

Business results of the Six European OEMs

(in millions EUR / 1,000 unit for global sales volume )
2008 2009 2010 2011 2012 2013 YoY
2012-2013
PSA Global sales volume 3,260 3,188 3,602 3,549 2,965 2,819
(4.9%)
Sales 54,356 48,417 56,061 59,912 55,446 54,090
(2.4%)
Operating profit 550 (689) 1,796 1,315 (560) (177)
Net profit (363) (1,161) 1,134 588 (5,008) (2,317)
Renault Global sales volume 2,382 2,309 2,627 2,723 2,549 2,628
3.1%
Sales 37,791 33,712 38,971 42,628 40,720 40,932
0.5%
Operating profit 326 (396) 1,099 1,091 782 1,242
58.8%
Net profit 599 (3,068) 3,490 2,139 1,712 695
(59.4%)
FCA Global sales volume 2,153 2,152 2,082 3,966 4,209 4,330
2.9%
Sales - 32,684 35,880 59,559 83,957 86,816
3.4%
Operating profit - 736 1,112 2,392 3,541 3,394
(4.2%)
Net profit - (345) 222 1,651 896 1,951
117.7%
VW Global sales volume 6,257 6,336 7,203 8,265 9,276 9,731
4.9%
Sales 113,808 105,187 126,875 159,337 192,676 197,007
2.2%
Operating profit 6,333 1,855 7,141 11,271 11,498 11,671
1.5%
Net profit 4,688 911 7,226 15,799 21,884 9,145
(58.2%)
BMW Global sales volume 1,436 1,286 1,461 1,669 1,845 1,964
6.4%
Sales 53,197 50,681 60,477 68,821 76,848 76,058
(1.0%)
Operating profit 921 289 5,111 8,018 8,275 7,986
(3.5%)
Net profit 330 210 3,224 4,907 5,111 5,340
4.5%
Daimler Global sales volume 2,073 1,551 1,895 2,111 2,198 2,354
7.1%
Sales 98,469 78,924 97,761 106,540 114,297 117,982
3.2%
Operating profit 2,730 (1,513) 7,274 8,755 8,820 10,815
22.6%
Net profit 1,414 (2,644) 4,674 6,029 6,830 8,720
27.7%
Total Global sales volume 17,561 16,822 18,871 22,283 23,042 23,826
3.4%
Sales - 349,605 416,025 496,797 563,944 572,885
1.6%
Operating profit - 282 23,533 32,842 32,356 34,931
8.0%
Net profit - (6,097) 19,970 31,113 31,425 23,534
(25.1%)

Sources: The OEMs' press releases and financial statements.
(Note): Numbers in brackets "(  )" represent negative value.