Sales, pricing and cost terms you meet when reading automaker and parts supplier earnings, plus future-technology terms such as autonomous driving and SDV. 16 terms in total.
An OEM assembles finished cars and sells them under its own brand; a parts supplier makes engines, transmissions, seats, electronics and the like for delivery to automakers. Supplier earnings depend heavily on customer production volume and price-cut demands.
e.g. When an automaker's sales rise, revenue at suppliers in the same group often rises too.
Wholesale is the number of cars an automaker hands over to dealers; retail is the number dealers actually sell to consumers. Revenue is mostly booked on wholesale, so retail staying weaker than wholesale can signal inventory piling up.
Even at the same unit sales, selling more expensive, higher-margin cars such as SUVs, luxury models and hybrids raises revenue and profit per car. This is called mix improvement and often explains why profit rises while volume is flat.
e.g. If large SUVs make up a bigger share than small sedans, the average selling price rises.
Discounts and support money that automakers give dealers or buyers to sell more cars. Rising incentives can keep sales up while cutting profit per car, and can be read as a sign that demand is weakening.
The number of days it would take dealers to sell their current stock at the current sales pace. Too long can mean more discounting and lower profit; too short can mean a car shortage and missed sales.
For Korean automakers that export heavily, a weaker won (a higher KRW/USD rate) tends to lift profit because the same dollar price brings in more won. A stronger won can weigh on earnings.
A tax charged on cars or parts imported from another country. When tariffs rise, exporters must raise prices or accept lower profit, so the share of production in local plants becomes an important variable.
A car contains tens of thousands of parts, so a shortage of even one, such as a chip, can halt a production line. When disruption hits, sales fall despite demand; when it eases, delayed production shows up all at once.
e.g. If automotive chips run short, finished cars cannot be shipped and revenue recognition is delayed.
An action in which a company repairs or replaces a product free of charge after a safety defect is found. Setting aside a provision for repair costs can reduce that quarter's profit, and a large recall can hurt brand trust.
Brands whose used cars hold their value make new cars easier to afford, so they sell well without discounts. For automakers that offer leasing and installment financing, falling used-car prices can mean bigger losses in their finance arm.
The share of total sales made up of hybrids and electric vehicles. EVs carry high upfront development and battery costs, so you need to check whether a rising share improves or worsens the company's profitability.
Electronic parts in a car, such as infotainment, displays, cameras and sensors, and power control units. As cars become more electrified and intelligent, electronics content per car rises and becomes a growth driver for related companies.
A 0 to 5 scale set by SAE (the Society of Automotive Engineers). Level 2 is driver assistance where the driver keeps watching; from Level 3 the car takes responsibility for driving under set conditions; Levels 4 and 5 drive without a driver.
e.g. A feature that handles both lane keeping and following the car ahead is usually Level 2.
A taxi service that carries passengers with self-driving technology and no human driver. Without driver labor costs the profit structure could change greatly, which fuels high expectations, but safety approvals and how fast service areas expand are the key variables.
A car designed so that software, more than hardware, determines its features and performance. Features can be added or sold for a fee after the sale, so it draws attention as a way for automakers to move from one-time sales to recurring revenue.
Fixing a car's software or adding new features over wireless communication without a visit to a service center. It can cut recall costs and is the foundation for selling features such as driver assistance as subscriptions.
e.g. Like a smartphone, a car can get an overnight update that improves its driver assistance.