The prospect of Renault and Nissan consolidating their alliance with a full merger boosted the shareholder value of the French company by 17.4 percent in the first quarter of this year.
PSA Group (up 15.3 percent) and Fiat Chrysler Automobiles (up 10.7 percent) also performed well, as indicated by the latest Automotive News Europe/PricewaterhouseCoopers Transaction Services Shareholder Value Indices. The one other automotive company to record a big gain during the quarter was parts supplier GKN (up 46.8 percent) following its failure to rebuff an 8.1 billion pound (9 billion euro) hostile takeover bid.
Overall, however, it was a mixed quarter for automotive companies. Automakers remained in positive territory for the third successive quarter, although the 2.3 percent rise recorded in Q1 this year was well below last year's gains of 11.5 percent in Q3 and 6.2 percent in Q4. Suppliers were virtually unchanged for the second quarter in a row, with a gain of just 1.7 percent, while losses in shareholder value for auto retailers, down 10.0 percent in Q4 2017, were extended to 11.8 percent in Q1 this year.
Following an announcement by Renault that CEO Carlos Ghosn would stay at the helm of the company for a further five years came reports that Renault and Nissan are now planning a full merger. Investors expect this would allow the two companies, which currently have cross shareholdings in each other, to fully realize the benefits of the existing alliance at a time of significant change in the auto industry.
Apart from this, Renault has set ambitious growth targets. It plans to launch eight electric vehicles by 2022, to double sales outside Europe within next five years and to increase profitability by 50 percent over the same period.
Peugeot has also enjoyed good growth of late and reported a 15 percent rise in sales to 3.6 million units last year, with strong sales in Iran and Latin America helping to offset declines in China and the UK.
VW and BMW achieved small gains in the first quarter while Daimler fell 2.3 percent against a background of negative news. This included a newspaper report, disputed by the company, that U.S. investigators had detected software in Mercedes-Benz diesel cars that might have been designed solely to pass regulatory emissions tests. Daimler, along with Porsche and Robert Bosch, was also affected by threats of strikes as Germany’s most powerful union, IG Metall, sought pay hikes and increased working flexibility. The final outcome of the talks, a 4.3 percent wage increase over 27 months and the right to a 28-hour working week, underlines that work-life balance is now as big a priority for organized labor in Germany as wage increases.
“Carmakers performed well in Q1, helped by continued talk of consolidation within the sector and, for some, positive trading sentiment. Many will be asking who will make the next move following the news regarding Renault and Nissan,” Jason Wakelam, PwC Automotive Deals leader said.