Auto stocks score double-digit gains in 2010
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The total return on investment in publicly owned global automakers and parts suppliers and U.S. auto retailers jumped last year, especially in the fourth quarter, the Automotive News/PwC Shareholder Value Index shows.
The index recorded double-digit returns over three-month and one-year periods for all three categories. Over the past three years, though, retailers and suppliers posted positive returns, but investments in automaker shares fell almost 7 percent.
By comparison, the S&P 500 index rose 11 percent in the fourth quarter and 15 percent in 2010 but is 8 percent lower than 3 years ago.
"Overall, the auto industry continued to exhibit strong shareholder return in the fourth quarter and all of 2010," said Jeff Zaleski, PwC Transactions Services partner. "Optimism has returned to the global auto industry."
Paul McCarthy, who heads PwC's automotive strategy team, said the financial results "reflect the verdict of shareholders and the market on our industry's performance in the first stage of the global recovery."
Last year global light-vehicle sales rebounded 13.5 million units, or 23 percent, from 2009 levels, to 71 million. PwC's Autofacts forecasting unit expects global sales to grow to 93.5 million units by 2015.
Auto-sector stocks are positioned to make further gains in 2011 as sales are expected to continue increasing, but investment returns aren't likely to match the torrid 2010 pace, PwC said.
Automakers surge
Vehicle-manufacturer values soared over the past year, up 19 percent collectively over 12 months and up almost 14 percent in the final quarter of 2010.
But PwC notes that the industry averages are skewed by General Motors Co. The "new" GM went public too recently to be included in the quarterly or one-year indices, and the three-year index is dragged down by the "old" GM's bankruptcy and subsequent loss of value.
Ford Motor Co. had the highest return of the group in the final quarter and over three years. It was second over the past 12 months.
BMW AG's return jumped almost 73 percent in the past 12 months, the most of any automaker. It ranked No. 3 over the past three years.
Korea's Hyundai-Kia Automotive Group finished No. 3 over one year and No. 2 over three years.
The only automaker whose return fell in all three periods was China's Shanghai Automotive Industry Corp., reflecting both slower growth in China and a correction in high-flying Chinese financial markets, PwC said.
Suppliers stay strong
Global auto parts supplier values outperformed the results of their automaker customers, scoring gains in all three time periods. And the supplier Shareholder Value Index also was higher than broader market indices over three-month, one- and three-year periods.
In the fourth quarter, values grew for every supplier except tire makers Hankook Tire Co. and Michelin & Cie. That reflects the continuing recovery and improved auto production and sales outlooks for 2011, PwC's Zaleski said.
In the past 12 months, supplier values rose about 33 percent, led by strong gains by most non-Asian parts makers.
The modest gain of almost 3 percent over three years shows that supplier values finally have regained the ground lost during the auto industry's worst slump in decades.
Retailers gain most
The six U.S.-based public auto retailers continue to outperform both other automotive sectors and broader U.S. market indices.
The sector has been quite stable over all three time periods, returning about 28 percent in the fourth quarter, nearly 40 percent over 12 months and almost 36 percent over three years.
"Retailers have restructured operations and finances to be able to operate profitably at much lower volume," Zaleski said.
"And restoring dividends, such as Lithia Motors has done, boosts returns both directly and by increasing share prices."
You can reach Jesse Snyder at jsnyder@crain.com.
