The latest Automotive News Europe/PricewaterhouseCoopers Transaction Services Shareholder Value Indices reveals that Europe’s auto industry suffered further setbacks in shareholder value in the final quarter of 2018. The value of car manufacturers fell 12.8 percent, while auto retailers dropped 10.9 percent and component makers were the worst hit, down 22.2 percent. This was the largest quarterly fall for suppliers since the 26.7 percent drop recorded in the first three months of 2015.
Among automakers Renault was the weakest performer. Following the arrest of CEO Carlos Ghosn in Japan its shareholder value fell 26.8 percent. It was not alone as all automakers lost ground in the fourth quarter, with Peugeot down 19.7 percent and Fiat Chrysler slipping 16.3 percent. Even the best performer, Volkswagen Group, was down 7.3 percent.
The EU’s implementation in Q3 of the new Worldwide harmonized Light vehicle Test Procedure (WLTP) also had an effect on investor sentiment toward the sector in Q4. The new method of measuring vehicle emissions and fuel usage, requiring time-consuming testing of every car model, caused significant marketplace disruption for automakers and their suppliers. At one point, for example, VW had 250,000 cars awaiting delivery in Germany.
The declines in the shareholder value of automakers and auto retailers were also in line with the exceptionally weak final quarter of 2018 for stock markets globally. Over the three months, the UK’s FTSE100 fell by 9.6 percent, the U.S.’s S&P 500 dropped by 13.5 percent and Germany’s DAX30 dipped 13.8 percent.
However, at the end of 2018 the values of automakers and suppliers were back close to recession levels, with investors concerned about the effects of a slowdown in Chinese car sales and worried that that U.S. and European automotive markets may have peaked. The depressed values also reflect a concern about the ability of existing industry participants to manage the transition from conventional gasoline and diesel technologies to future mobility solutions. Some analysts, however, think the pessimism has been overdone and that the current depressed share prices represent buying opportunities.
“It was a challenging quarter for the industry,” PwC Head of Automotive Deals Jason Wakelam said. “While the general economic uncertainty weighed heavily on many industries, the risks to the auto industry are greater given the nature of this largely discretionary spend.”