Automakers Lost $104.5 Billion in Combined Revenue in H1 2020
Automakers had a rough start to 2020, with global auto production, and sales slumped amid the coronavirus outbreak. Supply chain disruptions, factory closures, and sales drops had a massive impact on the largest automobile manufactures, causing a sharp fall in their revenues.
According to data presented by StockApps, the Volkswagen Group, Toyota, and Renault-Nissan-Mitsubishi Alliance, as the leading automobile manufacturers based on global sales, lost $104.5bn in combined revenue in the first half of 2020.
Volkswagen Group Revenue Plunged by $34.5bn, the Biggest Drop in 2020
The world’s largest automobile manufacturer, the Volkswagen Group sold the most cars in 2019, delivering 10.2 million sedans, sport-utility vehicles, and compact cars under its top passenger car brands, and almost 734,000 trucks in its three commercial vehicle brands. Statista data also revealed the German automaker hit a 25.4% market share based on new car registrations in Europe as of October.
Although the company managed to reduce the effects of COVID-19 in the first half of the year, the H1 2020 financial report still revealed severe losses. Between January and June, the Group’s sales revenue plunged by $34.5bn to $114bn, the heaviest fall among the top three automakers.
The COVID-19 outbreak caused a 27% drop in vehicle deliveries and an adjusted operating loss of $940 million in the first half of 2020, down from an $11.8bn adjusted operating profit in the year-earlier period, forcing the German automaker to slash its dividend. The Yahoo Finance data also revealed the Volkswagen Group market cap dropped by 17% in 2020, falling from $98.1bn in December 2019 to $80.8bn last week.
Toyota Motor Corporation, the world’s second-largest car producer, sold 10.74 million vehicles in 2019. With 7.9 million cars sold between January and June, 100,000 more than VW Group, the company could become the leading automaker in 2020 if COVID-19 is contained in its most important markets, Japan and the United States.
In fiscal 2020, ended on March 31st, 2020, the Toyota sales revenue dropped by $2.9bn or 1.1% to $290bn. However, the Q1 FY 2021 results, for the period between April and June 2020, revealed a 40.4% drop in revenue and the smallest quarterly profit in nine years as the coronavirus pandemic halved its car sales. Statistics show the revenue of the Japanese automaker plunged by $29.7bn YoY in the second quarter of 2020, with a total loss in the first half of 2020 reaching $32.7bn.
The auto giant expects coronavirus to deliver a major blow to earnings and sales in the fiscal year ending March 2021, with net profit forecast to plunge 64% year-over-year to $6.97bn.
Renault-Nissan-Mitsubishi Alliance Suffered a $37.3bn Loss
With 10 million vehicles sold in 2019 and 6.3 million in the first half of 2020, the Franco-Japanese Alliance, Renault-Nissan-Mitsubishi, ranked third on the list of the top-selling car manufacturers.
Nevertheless, the COVID-19 outbreak severely affected their business. The Renault Group suffered a massive downturn for the first half of 2020. Between January and June, the company reported $21.8bn in sales revenue, a $12.5bn or 34% plunge year-over-year.
Sales figures were also down for the period, with the Renault Group suffering a 34.9% plunge globally and 41.8% in Europe, the second-worst hit region after the Americas. Nissan’s sales dropped by 47.7% globally and 33.7% in its home market of Japan.
Mitsubishi Motors reported a $12.6bn revenue loss in the fiscal year ended March 31st, 2020. The downturn continued in the Q1 of the fiscal year 2021, with revenues falling to $25.5bn, a 32% plunge year-over-year. The Japanese multinational automotive manufacturer suffered a total loss of $24.8bn in the first half of 2020, while its market cap halved reaching $2.98 bn last week.
Statistics show the Franco-Japanese Alliance lost a total of $37.3bn in sales revenue in the first half of 2020.
Brent Crude Rises to $69 on IEA Report
Oil prices rose after the release of the International Energy Agency’s (IEA) closely-watched Oil Market Report, with WTI Crude trading at above $66 a barrel and Brent Crude surpassing the $69 per barrel mark.
Prices jumped even though the agency revised down its full-year 2021 oil demand growth forecast by 270,000 barrels per day (bpd) from last month’s assessment, expecting now demand to rise by 5.4 million bpd. The downward revision was due to weaker consumption in Europe and North America in the first quarter and expectations of 630,000 bpd lower demand in the second quarter due to India’s COVID crisis.
The excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws, the IEA said yesterday, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.
However, the upbeat outlook for the second half of the year remains unchanged, as vaccination campaigns expand and the pandemic largely comes under control, the IEA said.
Moreover, the global oil glut that was hanging over the market for more than a year is now gone, the agency said.
“After nearly a year of robust supply restraint from OPEC+, bloated world oil inventories that built up during last year’s COVID-19 demand shock have returned to more normal levels,” the IEA said in its report.
In March, industry stocks in the developed economies fell by 25 million barrels to 2.951 billion barrels, reducing the overhang versus the five-year average to only 1.7 million barrels, and stocks continued to fall in April.
“Draws had been almost inevitable as easing mobility restrictions in the United States and Europe, robust industrial activity and coronavirus vaccinations set the stage for a steady rebound in fuel demand while OPEC+ pumped far below the call on its crude,” the IEA said.
The market looks oversupplied in May, but stock draws are set to resume as early as June and accelerate later this year. Under the current OPEC+ policy, oil supply will not catch up fast enough, with a jump in demand expected in the second half, according to the IEA. As vaccination rates rise and mobility restrictions ease, global oil demand is set to soar from 93.1 million bpd in the first quarter of 2021 to 99.6 million bpd by the end of the year.
OPEC Expects Increase In Global Oil Demand Raises Members’ Forecast on Crude Supply
The Organisation of Petroleum Exporting Countries (OPEC) yesterday lifted its forecast on its members’ crude this year by over 200,000 bpd and now expects demand for its own crude to average 27.65mn bpd in 2021.
This is almost 5.2mn bpd higher than last year and around 2.7mn b/d higher than an earlier estimate of the group’s April production.
According to the highlights of the organisation’s latest Monthly Oil Market Report (MOMR), OPEC crude is projected to rise from 26.48 million bpd in the second quarter to 28.7 million bpd in the third and 29.54 million bpd in the fourth quarter of the year.
The report also indicated a fall in Nigeria’s crude production from 1.477 bpd in February to 1.473, a difference of just about 4,000 bpd before rising again in April to 1.548 million bpd, to add 75,000 bpd last month.
OPEC stated that its upward revision of members’ crude was underpinned by a downgrade in the group’s forecast for non-OPEC supply, which it now expects to grow by 700,000 bpd to 63.6mn b/d against last month’s report’s projection of a 930,000 bpd rise to 63.83mn bpd.
The oil cartel projected that US crude output would drop by 280,000 bpd this year, compared with its previous forecast for a 70,000 bpd decline.
On the demand side, OPEC kept its overall forecast unchanged from last month’s MOMR, stressing that it expects global oil demand to grow by 5.95 million bpd to 96.46 million bpd this year, partly reversing last year’s 9.48mn bpd drop.
Spot crude prices fell in April for the first time in six months, with North Sea Dated and WTI easing month-on-month by 1.7 percent and 1 percent, respectively.
On the global economic projections, the cartel said stimulus measures in the US and accelerating recovery in Asian economies might continue supporting the global economic growth forecast for 2021, now revised up by 0.1 percent to reach 5.5 percent year-on-year.
This comes after a 3.5 percent year-on-year contraction estimated for the global economy in 2020.
However, global economic growth for 2021 remains clouded by uncertainties including, but not limited to the spread of COVID-19 variants and the speed of the global vaccine rollout, OPEC stated.
“World oil demand is assumed to have dropped by 9.5 mb/d in 2020, unchanged from last month’s assessment, now estimated to have reached 90.5 mb/d for the year. For 2021, world oil demand is expected to increase by 6.0 mb/d, unchanged from last month’s estimate, to average 96.5 mb/d,” it said.
The report listed the main drivers for supply growth in 2021 to be Canada, Brazil, China, and Norway, while US liquid supply is expected to decline by 0.1 mb/d year-on-year.
Oil Rises Over Concerns of Fuel Shortages
Oil prices rose on Tuesday, as lingering fears of gasoline shortages due to the outage at the largest U.S. fuel pipeline system after a cyber attack brought futures back from an early drop of more than 1%.
Benchmark gasoline futures prices rose 1 cent to $2.14 a gallon.
On Monday, Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said it was working to restore much of its operations by the end of the week.
“Right now there’s a generalized anxiety premium being built into prices because of Colonial and it’s keeping a floor under the market,” said John Kilduff, partner at Again Capital LLC in New York.
Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks.
Traders booked at least four tankers to store refined oil products off the U.S. Gulf Coast refining hub after a cyber attack that knocked out the pipeline, shipping data showed on Tuesday.
North Carolina, the U.S. Environmental Protection Agency and Department of Transportation issued waivers allowing fuel distributors and truck drivers to take steps to try to prevent gasoline shortages.
OPEC on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India.
Meanwhile, the rapid spread of infections in India has increased calls to lock down the world’s second-most populous country and the third-largest oil importer and consumer.
India’s top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday.
On the bullish side for crude, analysts are expecting data to show U.S. inventories fell by about 2.3 million barrels in the week to May 7 after a drop of 8 million barrels the previous week, a Reuters poll showed.
Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.
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