Introduction
The automotive industry is a high-stakes arena where financial performance can make or break a company. In the late 2010s, Volkswagen and Daimler, two giants of the German automotive world, presented a study in contrasts. Volkswagen’s profitability surged, while Daimler’s faltered. This article dives into the financial data from 2017 to 2019 to uncover the reasons behind this divergence.
Volkswagen’s Profit Surge
Volkswagen demonstrated impressive financial growth during the period from 2017 to 2019. The company’s revenues increased steadily, from €230.7 billion in 2017 to €252.6 billion in 2019. Gross profit followed suit, rising from €42.5 billion in 2017 to €49.4 billion in 2019. Net profit also saw significant gains, climbing from €13.9 billion to €18.4 billion.
Daimler’s Profit Decline
In stark contrast, Daimler’s financial performance painted a different picture. While revenue saw a slight increase from €164.3 billion in 2017 to €172.7 billion in 2019, profitability declined sharply. Gross profit decreased from €34.3 billion in 2017 to €29.2 billion in 2019, and net profit plummeted from €14.3 billion to €3.8 billion.
Ratio Analysis: The Profitability Gap
A comparative ratio analysis highlights the diverging profitability trends. Volkswagen’s gross profit ratio remained relatively stable, while Daimler’s declined. Volkswagen’s net profit ratio increased, while Daimler’s decreased significantly. Return on equity (ROE) and return on assets (ROA) ratios further underscored Volkswagen’s superior profitability.
Key Factors and Strategic Differences
Several factors contributed to these divergent paths. Volkswagen’s effective cost management, pricing strategies, and investments in research and development likely played a role in its success. Daimler, on the other hand, struggled with controlling operating expenses and faced challenges from increased competition and changing consumer preferences.
Conclusion
The financial performance of Volkswagen and Daimler between 2017 and 2019 reveals a tale of two fortunes. Volkswagen’s ability to achieve consistent growth and profitability stands in stark contrast to Daimler’s declining profits, raising questions about Daimler’s strategic direction and operational efficiency.
Note: The above content is purely basis a comparison analysis of Annual Reports of VW AG and Daimler AG. The content is to be considered only as research oriented analysis content. This is only a personal opinion from my understanding of both reports. It is a study of the past data from current.
References
Daimler AG. (2018). Annual Report 2017. Available at: https://www.daimler.com/investors/reports-news/annual-reports/2017/
Daimler AG. (2019). Annual Report 2018. Available at: https://www.daimler.com/investors/reports-news/annual-reports/2018/
Daimler AG. (2020). Annual Report 2019. Available at: https://www.daimler.com/investors/reports-news/annual-reports/2019/
GISMA Business School. (2021). Financial Analysis Report Volkswagen vs. Daimler.
Volkswagen AG. (2018). Annual Report 2017. Available at: https://annualreport2017.volkswagenag.com/
Volkswagen AG. (2019). Annual Report 2018. Available at: https://annualreport2018.volkswagenag.com/
Volkswagen AG. (2020). Annual Report 2019. Available at: https://annualreport2019.volkswagenag.com/
