Stock investment. Pixabay Image.
Ford Motor (NYSE: F) and General Motors (NYSE: GM) are major automobile companies in the U.S. and globally. They are public companies, with stocks listed on the New York Stock Exchange (NYSE).
Both companies have committed to going all-electric and are expected to invest heavily in the transition. As a result, they have rolled out several flagship electric vehicles.
Despite the excitement and commitment, both companies are still pretty much in the early stages of the transition, with the majority of the sales still coming from fossil-fueled vehicles.
For example, Ford’s EV deliveries as of 2023 comprised only 2% of the company’s total vehicle volumes. Similarly, GM’s EV sales as of 2023 comprised only 3.3% of the company’s total vehicle volumes.
That said, this article compares Ford and GM from the perspective of several metrics, which include the vehicle revenue, profit and margin. Let’s take a look!
Readers interested in the R&D spending of both companies may find more resources on these pages: GM R&D spending and Ford R&D spending.
Please use the table of contents to navigate this page.
Table Of Contents
Definitions And Overview
Revenue
A1. Revenue Per Car
Profit
B1. Profit Per Car
Margin
C1. Vehicle Margin
Consolidated Margin
D1. Operating Profit Margin – GAAP
Conclusion And Reference
S1. Conclusion
S2. References and Credits
S3. Disclosure
Definitions
To help readers understand the content better, the following terms and glossaries have been provided.
Revenue Per Car: Revenue Per Car is defined as automotive revenue excluding leasing, regulatory credits, non-automotive segments, etc., divided by vehicle sales.
Revenue Per Car = Automotive Revenue / Vehicle Sales
Vehicle sales represent vehicle wholesale for both automakers.
Profit Per Car: Profit Per Car is defined as automotive gross profit divided by vehicle sales.
Profit Per Car = Automotive Gross Profit / Vehicle Sales
Vehicle sales represent vehicle wholesale for both automakers.
Vehicle Margin: Vehicle margin is defined as the ratio of automotive gross profit to automotive revenue.
Vehicle Margin = Automotive Gross Profit / Automotive Revenue
Automotive revenue represents car sales revenue excluding GM Financial in the case of General Motors and Ford Credit in the case of Ford Moyot.
Operating Margin: Operating margin is a financial metric that measures a company’s efficiency in generating profit from its operations.
It is expressed as a percentage and is calculated by dividing operating income (also known as operating profit) by net sales (revenue).
Operating Margin = Operating Income / Total Net Revenue
Essentially, operating margin shows what percentage of revenue is left over after paying for variable costs of production, such as wages and raw materials.
It’s a key indicator of a company’s financial health and its ability to manage its operations effectively. The higher the operating margin, the more profitable the company is considered to be.
Revenue Per Car
ford-vs-general-motors-in-revenue-per-car
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The definition of revenue per car is available here: revenue per car.
Overall, GM generates slightly higher revenue per vehicle versus Ford Motor, as shown in the chart above.
For example, GM took in revenue per vehicle totaling nearly $42,000 in fiscal year 2023, while Ford Motor earned just $37,600 in revenue per car in the same period.
On average, GM’s revenue per vehicle came in at $40,600 between fiscal year 2021 and 2023, while Ford’s figure reached $35,000 during the same period, which was slightly below General Motors.
A significant trend is the increasing revenue per vehicle for both automakers, as depicted in the chart above. For example, GM’s revenue per car has risen from $25,000 in 2017 to a record figure of $42,000 as of 2023. Ford’s figure has experienced a similar growth, from $22,000 in 2017 to $37,600 as of 2023.
The growing revenue per car for both automakers has been driven by several reasons. One of which is the increase in production and sale of SUVs and trucks for GM and Ford. SUVs and trucks generally have higher selling price and margins compared to smaller cars.
GM and Ford’s SUV and truck sales statistics are available here: GM SUV and truck sales and Ford SUV and truck sales.
The other reason is due to economic factors. For example, there has been inflation and disruptions to supply chains, which tends to drive up prices of raw materials and labor costs. Therefore, the global supply chain disruptions and inflationary pressures have led to an increase in vehicle prices, contributing to higher revenue per car for GM and Ford.
Profit Per Car
ford-vs-general-motors-in-profit-per-car
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Profit per car for both automakers is evaluated based on the automotive gross profit. The definition of profit per car is available here: profit per car.
As GM earns slightly higher revenue per car, as seen in prior discussions, it’s no surprise that GM earns higher profit per car, as shown in the chart above.
In fiscal year 2023, GM’s profit per vehicle came in at $4,300 while Ford generated just $3,500 in profit per car, about $800 or 18% lower than GM.
On average, GM earned $4,600 in profit per vehicle between fiscal year 2021 and 2023. Ford earned only $3,300 in profit per vehicle on average during the same period.
Vehicle Margin
ford-vs-general-motors-in-vehicle-margin
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Vehicle margin for both automakers is evaluated based on the automotive gross margin. The definition of the vehicle margin is available here: vehicle margin.
It is no surprise that GM earns much higher vehicle margin than Ford does, as shown in the chart above, since GM generates much higher revenue and profit per car than Ford Motor.
In fiscal year 2023, GM’s vehicle margin reached 10.4% versus Ford’s 9.3%. On average, GM earned an average vehicle margin of 11% versus Ford’s 9% between fiscal year 2021 and 2023.
Therefore, GM earns a significant profit per car than Ford does.
Operating Profit Margin – GAAP
ford-vs-general-motors-in-operating-profit-margin
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The definition of the operating margin is available here: operating margin.
From the perspectively of operation, GM operates more efficiently than Ford does, as reflected by GM’s much better operating profit margin in the chart above.
GM reaped in operating profit margin of 5.4% in fiscal year 2023 versus Ford’s 3.1%. On average, GM’s operating profit margin came in at 6.4% versus Ford’s 3.5% between fiscal year 2021 and 2023.
Summary
To recap, General Motors earns slightly better revenue and profit per vehicle than Ford does. In terms of margin, GM also generates higher vehicle margin than Ford.
From operating perspective, GM operates more efficiently than Ford, as GM has slightly better operating profit margin.
References and Credits
1. All financial figures in this article are obtained and referenced from annual reports which are available in:
i) Ford Earnings Releases, and
ii) GM Investor Relation.
2. Pixabay Images.
Disclosure
References and examples such as tables, charts, and diagrams are constantly reviewed to avoid errors, but we cannot warrant the full correctness of all content.
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