European carmakers were hit hard by the credit crunch as consumer confidence slumped to a 15-year low. This pessimism dissuaded potential buyers from splashing out on a new car. The sector as a whole shed 23.01 percent in value in the fourth quarter, according to the Automotive News Europe/PricewaterhouseCoopers Transaction Services Shareholder Value Index. This brought the sectors one-year decline to 36 percent. Over the past three years, however, automakers gave shareholders a return of 12.6 percent, thanks mainly to a 483 percent increase at Wolfsburg-based Volkswagen.
VW, Porsche take hits
After flying high on takeover interest from Porsche, German carmaker VW shed value in the last three months of 2008. VW shareholders saw 10 percent wiped from their stakes in the fourth quarter but can reassure themselves with the stocks almost sixfold increase in value over the past three years. A massive surge in the price of VW shares in October meant that the company was briefly the largest in the world by market capitalization.
As rumors mounted that Porsche was moving to seal its takeover of VW, short-sellers who had bet on a decline in the price of Volkswagen shares were caught out. Their rush to cover their positions caused the huge spike in Volkswagens share price. Porsche stock shed 27 percent of its value in the period, bringing the overall 2008 decline to 60 percent.
French carmakers Renault and PSA/Peugeot-Citroen were hit hard by slower sales in their home market in the final quarter of the year. Here too, the credit crunch undermined the confidence of the relatively resilient French car buyer. The companies expect slower sales to last into 2009 as the effects of the global financial crisis continue to ripple into other parts of the economy.
PSA has started a voluntary redundancy plan that aims to trim 4,450 jobs across its work force. The automaker forecasts a 17 percent drop in fourth quarter sales and a decline of 10 percent in 2009. Rival Renault said it would send home 1,000 workers from a factory in Brazil for five months, paying them compensation rather than wages. Shares in Renault shed 58 percent of their value in the final quarter of the year while Peugeot lost 54 percent.