COVID-19 pressures cost Volkswagen, Ford, Toyota, GM, Daimler $63bn market cap in 8 months
Aderemi Ojekunle is a Businessamlive Reporter.
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Charles Abuede
The world’s top five automobile manufacturing companies, Volkswagen Group, Ford Motors, Toyota Motor Corporation, Daimler AG and General Motors saw $63 billion peel off their total market capitalisation between December 2019 and the third week of August, 2020 as a result of mounting pressures from the coronavirus (COVID-19) pandemic, an analysis of their stock performances has shown.
From a total market cap of $426.5 billion in December 2019, it plunged to $363.5 billion in the third week of August, official buyshares statistics access by Business A.M. revealed.
The COVID-19 pandemic has severely impacted the global automotive industry, placing intense pressure on a market which already was coping with a downshift in global demand for automobiles, and resulting in a sharp supply chain disruptions and factory or business closures.
Volkswagen Group and Toyota Motor Corp lost a combined $33.1 billion in market capitalisation
Volkswagen, the world’s largest automaker, managed to reduce the effects brought about by the coronavirus crisis during the first six months of 2020, but the financial report of the group shows that sales revenue fell by 23.2 per cent since January to reach €96.1 billion at the end of June, this year. Until the close of the second quarter, Volkswagen also reported a significant year-on-year decline in its deliveries by 27.4 per cent to 3.9 million vehicles.
Volkswagen’s market cap stood at $87.6 billion by the end of 2019 with the figure falling by $17.7 billion to $69.9 billion in August 2020, according to Yahoo Finance,
Frank Witter, a member of Volkswagen Group’s management board in charge of Finance and IT, said: “The first half of 2020 was one of the most challenging in the history of our company due to the Covid-19 pandemic. Thanks to the great team effort, we have gradually been able to ramp up operations within the group and up until now, have steadily managed to navigate through this unprecedented crisis.”
On the other hand, Toyota Motor Corp, the second-largest motor manufacturer in the world, lost $15.4 billion in market cap to the COVID-19 pandemic, falling from $196.9 billion as at December 2019 to $181.5 billion eight months later. The company’s financials show that the firm recorded the smallest quarterly profit in nine years as the pandemic halved its global car sales. By the end of the second quarter, Toyota’s operating profit plunged by 98 per cent to $131.73 million.
Daimler, Ford and General Motors lost $29.9 billion in combined market cap
Daimler AG, the world’s third-largest vehicle manufacturer also saw a staggering drop in its market capitalisation by as much as $9.1 billion in the midst of the coronavirus crisis. Statistics accessed by Business A.M. show that within eight months, the automaker’s market cap fell from $52.8 billion as at December 2019 to $43.7 billion in August. The European vehicle manufacturing giant also reported a substantial loss during Q2’2020 due to sharp fall in sales on the grounds of the coronavirus pandemic.
During the second quarter of the year, Daimler’s auto total sales by unit fell by 34 per cent to 541,000 passenger cars and commercial vehicles with the company witnessing a drop in revenue by 29 per cent to €30.2 billion at the end of June.
In a similar development, the total market capitalisation of Ford and General Motors, the two leading U.S. manufacturers on the list, declined by $20.8 billion since the outbreak of the COVID-19. According to statistics, Ford’s market cap plunged by $10.4 billion in eight months from $37.9 billion as at the end of 2019 to $27.5 billion in August.
Although Ford was struggling in the midst of an $11 billion restructuring plan to control and roll out new vehicles, before the emergence of the pandemic, which forced the firm to close US factories for more than seven weeks during Q2’2020, it, however, reported a $1.12 billion net profit in Q2 amidst the virus.
General Motors, the fifth largest automaker in the world, on the other hand, lost $10.4 billion in market cap to the virus in eight months, as the automaker witnessed a fall from $51.2 billion to $40.8 billion between December 2019 and August, the statistics revealed.