Ransquawk

The first motorized vehicles, originally steam powered, were built in the 18th century. However, the real development of motorization took place only in the 20th century. Mass production of cars started in 1901. The construction of such a two-seater with a one-cylinder low-power engine was developed by American engineer and entrepreneur Ransom Eli Olds, who created the Oldsmobile brand.


Cars in Olds’ factories were constructed using rather simple methods. Only the invention of the production belt has revolutionized the automotive industry in the United States and then in Europe.

Ford Motor Company

The manufacturer of the production line in the automotive industry, which significantly reduced the cost of car production was Henry Ford, who founded a car factory in 1903. Ford decided to produce one model and only one color version, namely the Ford T, which was the first mass-produced car. The use of the production belt and the specialization of one model made the car much cheaper than the competition.

Ford T debuted in 1908. Its predecessor was Model S from 1906. Ford T was offered at an affordable price, so the average American earner was able to afford it. The model sold more than 15 million units and was produced until 1927 when its successor, the Model A. In addition to the first model T, the Ford Mustang of 1964, the first of its kind. The generation was produced in the amount of 1.5 million copies.

Due to the financial crisis in the 2010-2013 period, Ford Motor Company received approximately $ 2.5 billion in federal and state grants, which ranked it among the top 10 US subsidized companies.

Some relevant market data (as of March 2017)

  • COE – Mark Fields
  • Number of employees – 201 000
  • Headquarters – Dearborn, Michigan
  • Index – S&P 500, S&P 100
  • Shares Outstanding – 4,04 billion
  • Float Current – 3,97 billion
  • Held by Insiders – 0,24%
  • Held by Institutions – 55,74%
  • Market Cap – 46,19 billion USD
  • Price/Earnings – 10,12
  • Price/Earnings for the whole industry – 13,64
  • P/E CAPE Shiller – 17,38
  • Over the past 13 years, P/E CAPE Shillera ratio was the highest at 40,32; the lowest at 1,78; and the median at 3,1
  • P/E CAPE Shiller for the whole industry – 23,78
  • Revenue for the last year – 151,50 billion USD
  • Increase/decrease revenue for the last year – 1,49%
  • EBITDA for the last year – 13,43 billion USD
  • Net Income for the last year – 4,59 billion USD
  • Earnings Per Share for the last year – 1,14 USD
  • Increase/decrease earnings for the last year – (-36,90)%
  • Dividend for the last year – 0,6 USD
  • Dividend Yield – 5,17%
  • 4 Year Average Yield – 3,76%

General Motors

General Motors was founded in 1908 as a holding company for the Buick automotive company. Then came the merger with Oldsmobile, and in 1909 General Motors took over Cadillac. In 1925 General Motors took over the British car manufacturer Vauxhall, and in 1929, the German Opel. Both brands were purchased by PSA. Other famous brands that belonged to GM were the Hummer, which was liquidated in 2010, Pontiac, which was also closed in 2010. The Swedish Saab company, which ended its operations in 2011, or the well known Polish customers of the South Korean Daewoo brand, which disappeared from the market in 2004. GM now has brands such as Buick, Cadillac, Chevrolet, GMC, or Australian Holden.

The US auto industry was concentrated in the hands of three corporations: General Motors, Chrysler and Ford, and General Motors was the first US corporation to announce a one billionth annual profit in 1955.

After the outbreak of the financial crisis in 2008, the company was struggling with huge financial problems. On June 1, 2009, the group announced bankruptcy and went bankrupt. On July 11, 2009 GM was redeemed by the US Treasury Department. Between 2010 and 2013, the company received $ 3.5 billion in state and federal grants, placing it 4th among the most subsidized companies in the United States.

Some relevant market data (as of March 2017)

  • CEO – Mary Teresa Barra
  • Number of employees – 225 000
  • Headquarters – Detroit, Michigan
  • Index – S&P 500, S&P 100
  • Shares Outstanding – 1,50 billion
  • Float Current – 1,36 billion
  • Held by Insiders – 9,38%
  • Held by Institutions – 74,39%
  • Market Cap – 52,05 billion USD
  • Price/Earnings – 5,73
  • Price/Earnings for the whole industry – 13,64
  • P/E CAPE Shiller – 0,00
  • Over the past 13 years, P/E CAPE Shillera ratio was the highest at 941,25; the lowest at 0,00; and the median at 15,73
  • P/E CAPE Shiller for the whole industry – 11,78
  • Revenue for the last year – 166,38 billion USD
  • Increase/decrease revenue for the last year – 9,20%
  • EBITDA for the last year – 20,67
  • Net Income for the last year – 9,42 billion USD
  • Earnings Per Share for the last year – 6 USD
  • Increase/decrease earnings for the last year – (-0,97%)
  • Dividend for the last year – 1,52 USD
  • Dividend Yield – 4,41%
  • 4 Year Average Yield – 2,96%

Tesla Inc.

Companies like GM or Ford are famous for producing gas-guzzling cars. By the 1970s, Americans were not bothered by fuel consumption, as they had plenty of oil. Sometime in the 70s, it became apparent that oil could run out of sight faster than anyone else, and the United States was forced to import up to 70% of its oil consumption. The situation improved after the so-called shale revolution, when the US became the third power in the world to extract oil, but still could not stop changes that slowly began to sneak into the automobile.

One of the symbols of this breakthrough is Tesla, which manufactures electric cars. The company was founded in 2003, and the first fully electric car was launched in 2008. Currently, the company produces three models, the compact Model 3 sedan, the middle-sized model S and the Model X crossover.

Nowadays more and more corporations are putting on electric power. Some offer a combination of an internal combustion engine and an electric motor, that is, hybrids, others shyly start working on creating a fully electric car. However, only Tesla has been producing and promoting fully electric vehicles, which are increasingly reaching up to 400 km. It seems that the elimination of standard internal combustion engines that depend on non-renewable energy sources and pollutes the environment is a matter of time.

Some relevant market data (as of March 2017)

  • COE – Elon Reeve Musk
  • Number of employees – 17 782
  • Headquarters – San Carlos, California
  • Index – NASDAQ 100
  • Shares Outstanding – 161,56 million
  • Float Current – 116,48 million
  • Held by Insiders – 28,57%
  • Held by Institutions – 64,13%
  • Market Cap – 50,58 billion USD
  • Price/Earnings – N/A
  • Price/Earnings for the whole industry – 13,64
  • P/E CAPE Shiller – N/A
  • P/E CAPE Shiller for the whole industry – 11 ,78
  • Revenue for the last year – 7,00 billion USD
  • Increase/decrease revenue for the last year – 73,01%
  • EBITDA for the last year – 233,55 million USD
  • Net Income for the last year – (-674,91) million USD
  • Earnings Per Share for the last year – (-4,86) USD
  • Increase/decrease earnings for the last year – (-4,86)
  • Dividend for the last year –no

Summary

It seems that the auto industry has come to grips with the multi-billion dollar grants that the Obama administration has donated. In 2016, the record number of new cars sold was 17.6 million. However, the first quarter of 2017 is already so successful. In March sales of new cars fell sharply and if this trend continues, 2017 sales would be around 16.6 million. Even with optimistic predictions, 17.2 million cars are expected. There is no reason to panic, but some slowdown is observed.

In the United States, the number of cars on the road increases. Their number is 270 million compared with 249 million in 2012. This means that fewer and fewer cars are being scrapped and there is a growing demand for used cars. Now American roads disappear 11 million cars a year compared to even 14 million 10 years ago. It must be stressed that the crisis of sale concerns passenger cars. Utility models continue to enjoy unmatched popularity, for example the pick-up market for the first three months of 2017 increased by 6 percent. There are no other companies in the automotive industry. The tire company Goodyear expects good results in the coming years.

Deutsche Bank analysts warn that the situation in which Americans are increasingly favoring used cars can be dangerous for companies such as Ford and General Motors who have just enjoyed the exit of the recent crisis. With another intervention like in 2009, the US government could have a problem. Already at that time, society was very rebel against multi-billion dollar donations. Most Americans believed that it was better to let the auto companies fail than to pump up huge amounts of money in the industry when ordinary Americans lose their homes and their lifetimes. If the then government wanted to do such an operation again, it would certainly be a huge public outcry, which puts car companies in a much more difficult position than in 2008.

The partner of the cycle is TMS Brokers

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