At Full Chat

Barely four months into 2004, and I'm already on my fourth work-related trip of the year to the USA. And finally, after all these tedious flights and sleepless nights, I've found a cure for my insomnia. It's called a pocket calculator - and mine has been doing some serious overtime. What it tells me is that America is no longer the world's biggest car maker, GM is not the largest firm, and Ford sure isn't right behind it. And as for Chrysler Jeep, it's not even a US company anymore!

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By Mike Rutherford

14th April 2004

My idea of the biggest is not necessarily the manufacturer or country which builds the most products. After all, making vehicles is one thing, but selling them - at a sensible price - is another. So what measurement am I using to compile my global top 20 of volume auto firms? Gross income, production figures, assets, share prices, market values, research and development, number of factories/employees? All fascinating, but they can be misleading, so for now I'm ditching them. Since I'm focusing mainly on America, and the only thing that matters here is the bottom line, I'm talking in terms of profitability, plain and simple.

And that's not as easy as it sounds, as those working in the US financial industry have different and conflicting ways to measure profits. But if I told you that in the past full year GM turned in a profit of around ΂£2.2billion, while Ford made ΂£444million (or as little as ΂£283million, say some), you'll get an idea of how well or badly The General and Uncle Henry are doing. Counting down the table, Toyota's profit was ΂£4.6b, DaimlerChrysler's ΂£2.9b, Nissan made ΂£2.4b and Honda scored just over ΂£2b. I won't bore you with more incomprehensible numbers, but next up it's VW, BMW, Renault and PSA Peugeot-Citroen. Hyundai rounds off the top 10, followed by Ford, Porsche, Perodua, Mitsubishi, SsangYong, Suzuki and Mazda. Then it's loss-making Isuzu and even bigger loss-making Fiat.

From this profitability chart, you'll see GM is behind two Japanese firms and a German one. Meanwhile, troubled Ford is at best hundreds of millions behind humble Hyundai, and depending on who you believe, it could be argued the firm is behind comparative minnow Porsche and even Volvo Group (the engineering and truck bit not owned by Ford). It really is that sad for the once-great blue oval. Ford, and to a lesser extent GM's, problem is simple: both have far more revenue than any global rival, but struggle to convert that into decent profits. And figures in black are the only things that secure the long-term viability of companies, which like nothing less than to keep dipping into their dwindling financial reserves to fund much needed future projects. To put Ford's latest annual profit into perspective, that ΂£444m (or is it ΂£283m?) might not be enough to develop one new model.

So is the US car industry, and its two main players, the world's biggest? I don't think so. Indeed, given that six of the profitable firms in my top 20 are Japanese, four are German and only two are American, the US is, arguably, the third biggest auto nation on the planet. It ranks alongside France and South Korea, who each have two entries. Malaysia, Sweden and Italy also creep into the global top 20. Alas, Britain and MG Rover do not.