Automakers Ford and Hyundai shared financial updates from the fourth quarter, offering new insights into their 2023 performance.
Ford announced that a pre-tax remeasurement loss, stemming from employee retirement expenses and falling discount rates, would lower its Q4 profits by roughly $1.3 billion. The automaker noted that the total cost of remeasurement equaled $1.7 billion.
A remeasurement refers to an adjustment of asset values implemented to improve the accuracy of earnings reports. Events ranging from common instances, such as inventory write-downs, to rarer occurrences, such as policy changes governing the way financial estimates are calculated, can cause companies to record a remeasurement loss, typically noted as a reduction in net income. Ford plans to report its Q4 earnings in February.
Although analysts had expected it to earn another $500 million during the period, the number nevertheless underscores the company’s impressive rebound from the COVID pandemic, during which many Asian automakers were disproportionately affected by supply chain disruptions and factory shutdowns. For 2024, Hyundai expects its profit margins to stay relatively stable while revenues rise 4% to 5%.
These updates underline the conflicting stances companies such as Ford and Hyundai have taken after 2023. Last year was ultimately a successful one for the automotive sector, but it not without its challenges, many of which are likely to persist into 2024. Given the current trajectories of supply and demand, some industry leaders expect the car market to be more consumer-friendly in the near future, potentially reverting back to pre-pandemic norms in terms of pricing.
Others, however, seem to believe the opposite, with some high-profile leaders such as Stellantis CEO Carlos Tavares determined to avoid discounts at all costs. Whether 2023’s momentum can be sustained in the months ahead, or whether the market will face more cooling remains to be seen.