These are the biggest and best car companies in the world.
The auto industry has been going strong for more than 100 years, but it remains one of the hardest areas for newcomers to break into. In 2010, Tesla (ticker: TSLA) became the first U.S. car company to go public since Ford Motor Co. (F) in 1956. Although it hasn't proven an ability to remain consistently profitable, investors are valuing the electric car maker as one of the 10 most valuable car companies in the world. With the U.S.-China trade war disproportionately hurting the global auto industry in 2019, here's a look at the 10 biggest car companies on the planet by market capitalization. Values are current through September 2019.
10. Hyundai Motor Co. (HYMTF): $25 billion
South Korean car manufacturer Hyundai overtook Fiat Chrysler (FCAU) to become the 10th most valuable auto company in the world. Compared to most other companies on this list, Hyundai's 1967 founding date makes it a relative newcomer to the industry; many other top names were founded in the early 20th or late 19th century. As the first-ever company to make a car in South Korea, Hyundai built up a reputation for quality cars at an affordable price; revenue didn't fall in a single fiscal year between 2011 and 2018, and last year Hyundai posted more than $87 billion in worldwide sales. Deploying 5% of revenue toward research and development, current research projects include electric vehicles, solar-powered cars and hydrogen-powered fuel cell vehicles.
9. Ferrari N.V. (RACE): $29 billion
Luxury Italian carmaker Ferrari overtook the likes of Nissan (NSANY) and former parent company Fiat Chrysler to vault into position as the world's ninth most valuable car company in 2019. The company is the only one on this list relying strictly on the low-volume, high-price business model. While Tesla certainly qualifies as low volume, it not only far surpasses Ferrari in terms of vehicle production numbers but also has a business model that relies on the Model 3 becoming an affordable, mass market product. Ferrari delivered just 9,251 cars in 2018, showing that scarcity and the high margins that come with it can also produce a global auto industry powerhouse.
8. Ford Motor Co. (F): $36 billion
Get this: Ford posted revenue of $148 billion in 2018, compared to a top line figure of about $4 billion for Ferrari in the same year. Yet even though Ford's gross sales were roughly 37 times greater than Ferrari's, the iconic U.S. automaker is only worth about 25% more than its high-end Italian peer. What gives? Well, Ferrari's profit margins are downright elite at 23% -- a reflection of its premium brand and limited production, which routinely causes antique Ferraris to set and re-set the record for the most expensive cars sold at auction. Collectors pay tens of millions for rare models. Ford, on the other hand, has a net profit margin of just 1.4%. At high volume, that's still not peanuts.
7. Tesla (TSLA): $39 billion
Although electric car manufacturer Tesla has lost $9 billion in market value since May 2018, it didn't move up or down in the rankings of the world's biggest car companies, maintaining its position as the seventh most valuable automaker worldwide. Tesla CEO Elon Musk, though brilliant and bold, has also proven erratic and unreliable, with ill-advised tweets and podcast appearances causing trouble with regulators and investors alike. Still trading largely on hope, shares trade for 56 times expected forward earnings. The U.S.-China trade war could disproportionately affect Tesla, which was forced to raise the price of imported Model 3 cars in China to over $50,000 ahead of a tariff hike in December on U.S.-made cars from 15% to 40%.
6. BMW (BMW.DE) (BMW.MI): $42 billion
Founded in Munich in 1916, BMW has slipped a few spots on the list of the world's top automakers in the last year-plus. That makes sense, since it was worth a full $29 billion more in May 2018 than it is today. That dramatic fall still only docked it two slots, and it's possible the luxury automaker is currently undervalued; annual revenue was $107 billion last year, making the price-sales ratio just 0.4. As with others on this list, the U.S.-China trade spat has caused spiraling investor confidence. Beijing's upcoming 25% tariff hike on U.S.-made cars will hurt BMW, which, like Tesla, exports a lot of vehicles from U.S. plants to the Chinese end market.
5. Honda Motor Co. (HMC) $42 billion
About 16 months ago, Honda's market cap stood at $61 billion. Since then, the company has shed more than $1 billion a month in market value on average, and yet still remains the fifth most valuable auto company in the world. That should help illustrate the rising levels of concern with the global auto industry. This falling market cap came despite unit sales in fiscal 2019 that grew 1.6% to 3.75 million vehicles. A few factors beside the trade war that may have contributed to market pessimism: negative currency pressures (Honda is based in Japan) and the far more ubiquitous worries that as a stereotypical cyclical industry, automakers will soon suffer if the best times are indeed in the rearview mirror.
4. Daimler AG (DAI.DE): $49 billion
Daimler shares have been steadily slumping for over four years. Over that time, the stock has lost more than 50% of its value. Even as of May 2018, however, the parent company of Mercedes-Benz and the Mercedes-Maybach brands was worth a full $35 billion more than it is in late 2019. As one might imagine, this caused Daimler AG to slip a spot in the rankings, even as 2018 shaped up to be its eighth straight record year. Its strength in the Asia-Pacific region, where Daimler posted its best full-year unit sales ever last year, is a double-edged sword: Six of the top 10 vehicles exported from the U.S. to China are made by BMW or Daimler, making additional duties on U.S. exports especially harmful to the German luxury car company.
3. General Motors Co. (GM): $52 billion
Although Tesla was briefly the most valuable U.S. auto company -- despite selling disproportionately fewer units than 111-year-old GM -- it looks like markets have regained a scintilla of sanity. Once more America's most valuable car company, GM owns brands like Buick, Cadillac, Chevrolet and GMC, in addition to several Asian brands. Its 2016 acquisition of Cruise Automation, a leading self-driving car startup, made GM an instant player in the high-growth driverless car market. The all-electric Chevrolet Bolt EV is a mass-produced, long-range direct competitor to Tesla's Model 3, further proof that Tesla doesn't have such an insurmountable head start after all. Despite GM stock's conservative valuation -- the stock trades at just 6 times earnings and pays a 4.1% dividend -- GM jumped from the sixth- to third-largest auto company on earth in the last 16 months.
2. Volkswagen AG (VOW.DE): $80 billion
When you hear the word "Volkswagen," odds are you don't think "arguably the world's most dominant auto company." Perhaps that's because consumers associate Volkswagen with the brand itself, not the eponymous company that boasts brands like Porsche, Audi, Bentley, Bugatti, Lamborghini and Ducati under its corporate umbrella. Volkswagen retains its title as the second most valuable car company in the world in 2019, after selling 10.83 million vehicles last year -- more than any other company. This looks like a consummation of Volkswagen's turnaround; the 2015 emissions cheating scandal damaged its reputation and made investors uncertain whether consumers would forgive the company.
1. Toyota Motor Corp. (TM): $211 billion
Japan's Toyota Motor Corp. is still easily the largest auto company in the world, even as its share price has essentially has been treading water since 2013. In an industry hobbled by the U.S.-China trade war, the fact TM stock has gone sideways over the last year-plus has only increased its lead on rivals: worth four times Tesla just 16 months ago, now TM is worth five times Musk's brainchild. Toyota was way ahead of the pack in the hybrid market with the Prius, but its all-electric vehicles currently leave something to be desired. Investors should expect mid-to-low single-digit revenue growth from the owner of other brands like Lexus, Avalon and Crown. Considering TM and GM both enjoy elite profit margins -- just above 6% -- for their size, what makes Toyota more than twice as valuable? Answer: twice GM's revenue.
The 10 most valuable car companies in the world.
-- 1. Toyota Motor Corp. (TM): $211 billion
-- 2. Volkswagen AG (VOW.DE): $80 billion
-- 3. General Motors (GM): $52 billion
-- 4. Daimler AG (DAI.DE): $49 billion
-- 5. Honda Motor Co. (HMC) $42 billion
-- 6. BMW (BMW.DE) (BMW.MI): $42 billion
-- 7. Tesla (TSLA): $39 billion
-- 8. Ford Motor Co. (F): $36 billion
-- 9. Ferrari N.V. (RACE): $29 billion
-- 10. Hyundai Motor Co. (HYMTF): $25 billion
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