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AW rev counter: revenue grows but margins less steady

Jonathan Storey summarises the key takeaways from the latest automaker quarterly results

The global economy picked up in Q1 2023, as supply disruptions continued to ease and lower energy prices removed some inflationary pressure. However, inflation remained above targeted levels, particularly in North America and Europe. In China economic year-on-year (YoY) growth recovered to 4.5% in Q1-23 as the economy reopened.

Over the first three months of the year global light vehicle demand grew by 4.9% or just under 1 million units, helped by the fulfilment of back-orders as supply shortages eased. The overall increase was constrained by a drop in China, where a sharp fall in January was only partly offset by increases in the following two months.

Change in revenue (%) Q1-2023 -v- Q1-2022

Change in revenue (%) Q1-2023 -v- Q1-2022

Looking at the aggregate performance of the 16 leading global OEMs, unit sales rose by an average 5.5%, ranging from a drop of 18.4% at MMC to a rise of 17.2% at Subaru.

Change in Ebit margin (pts) Q1-2023 -v- Q1-2022

Change in Ebit margin (pts) Q1-2023 -v- Q1-2022

Although not all the major OEMs saw higher sales for the quarter, without exception they all reported higher revenue, most of the increases in double digits, as net pricing remained buoyant and the year-ago comparators for some OEMs were weak.

Change in unit sales (%) Q1-2023 -v- Q1-2022

Chart 3: Change in unit sales (%) Q1-2023 -v- Q1-2022

The average Ebit margin dipped by 0.1 points to a still-respectable 7.4%, as five OEMs reported lower margins, ranging from a drop of 0.3 points at Mercedes-Benz to 7.8 points at Tesla—which reported a 26% drop in Ebit. The other nine major OEMs reported Ebit margin increases ranging from 0.3 points at GM to 3.8 points at Subaru.

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