Global automakers' market values drop in June, pressuring valuations of traditional ICE manufacturers

In June 2024, the market capitalizations of major global automakers broadly declined, reaching their lowest levels in nearly 25 years. Among over 40 mainstream vehicle manufacturers tracked by the China Passenger Car Association (CPCA), Toyota’s market cap fell 27% month-over-month (MoM) and 12% year-over-year (YoY), hitting an 18-month low. Honda’s market cap dropped 13% MoM and 22% YoY. During the same period, international automakers such as General Motors (GM) and Ford saw average YoY declines of 7% and MoM declines of 9%. Japan’s seven major automakers—Toyota, Honda, Nissan, Suzuki, Mazda, Subaru, and Mitsubishi—are projected to report combined net profits of JPY 3.9 trillion for fiscal year 2026, a 48% decline from the record high of JPY 7.54 trillion achieved in FY2023. Toyota reported FY2025 sales revenue of JPY 50.68 trillion, up 5.5% YoY, but its net profit declined for the second consecutive year, falling 19.2% YoY to JPY 3.85 trillion. In May 2026, Toyota’s global production and sales decreased by 5.8% and 7.4% YoY, respectively, with sales in China plunging 31.7% YoY. Due to geopolitical tensions in the Middle East, Toyota plans to cut an additional 100,000 units of overseas internal combustion engine (ICE) vehicle production by February 2027. Honda reported its first annual operating loss since going public nearly 70 years ago for FY2025, with an operating loss of JPY 414.3 billion and a net loss attributable to owners of JPY 423.9 billion, primarily due to asset impairments related to its EV business. The company forecasts EV-related losses will reach JPY 500 billion for the fiscal year ending March 2027 and expects operating profit of JPY 1 trillion in FY2026, excluding these EV-related impacts. In contrast, Tesla’s market cap dipped slightly by 4% MoM in June but surged 47% YoY, supported by progress in AI and Full Self-Driving (FSD) technologies, which bolster its tech-driven valuation premium. Chinese automakers overall outperformed their international peers: Leapmotor (VOYAH) saw a notable rise in market cap, while NIO, Foton Motor, and Sinotruk benefited from strong sales or policy support. However, BYD, Xiaomi, XPeng, Li Auto, and Seres all experienced sharp declines—Xiaomi’s market cap fell 41% MoM and 60% YoY. Among the “NIO-Xpeng-Li Auto” trio, only NIO posted a marginal MoM gain, though it still declined 24% YoY. Traditional Chinese brands such as Geely, Great Wall, Changan, and SAIC Motor also recorded declines both MoM and YoY. The commercial vehicle segment remained relatively resilient, supported by heavy-duty truck subsidies and trade-in policies, demonstrating stronger cyclical resistance than passenger vehicles. Despite sector-wide valuation pressures, new energy vehicles (NEVs) and exports continued to post significantly higher sales growth than conventional ICE vehicles, indicating that markets remain tolerant toward sub-sectors with clear growth trajectories. From a valuation perspective, Tesla trades at a price-to-earnings (P/E) ratio of 400x, while BYD and Seres also maintain elevated multiples. In contrast, traditional international automakers—including Toyota, Honda, GM, Ford, and Stellantis—trade at P/E ratios between 5x and 9x, with generally low price-to-book (P/B) ratios: Stellantis at 0.2x, Honda at 0.5x, and GM and Ford at 1.1x and 1.5x, respectively. Analysts note that the current valuation adjustments reflect the market digesting the “electrification premium” bubble built up between 2023 and 2025 and reassessing the timing risk between investment in electrification and profit realization for legacy automakers. Companies capable of maintaining profitability amid price wars and executing orderly EV transitions are likely to enjoy greater valuation upside. This correction cycle is also steering the industry toward greater supply chain autonomy and healthier long-term development.