Auto retailers gave investors 40% return in '10
Industry's other groups also had double-digit gains
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The total return on investment in the six publicly owned U.S. auto retailers jumped last year, the Automotive News/PwC Shareholder Value Index shows.
The retailers returned about 28 percent in the fourth quarter and nearly 40 percent over 12 months.
As a group, their total return outperformed that for global automakers or global parts suppliers. The retailers' return also beat broader U.S. stock-market indexes.
"Retailers have restructured operations and finances to be able to operate profitably at much lower volume," said Jeff Zaleski, PwC Transactions Services partner. "And restoring dividends, such as Lithia Motors has done, boosts returns both directly and by increasing share prices."
Put in $100, get ...
The index looks at the value of $100 invested in a company's stock over three months, one year and three years. It takes into account changes in a company's share price, dividends, share buybacks and issuance of new shares.
The index tracks the six largest publicly listed U.S. automotive retailers for whom new cars and trucks make up at least half of their total unit sales.
The new-car requirement is why CarMax Inc. of Richmond, Va., which overwhelmingly sells used vehicles, is no longer included in the list. In 2009, CarMax led the retailers in one-year return.
Some automakers and suppliers outshone the retailers.
In 2010, the best-performing retailer was Lithia Motors Inc. of Medford, Ore., with a 77 percent return to investors. That topped the 73 percent return from the top-performing automaker, BMW AG. But it fell short of the top supplier, France's Plastic Omnium Co., which had a 165 percent return.
Over the past three years, Group 1 Automotive Inc. of Houston and AutoNation Inc. of Fort Lauderdale, Fla., finished almost neck-and-neck, with returns of 80 percent. But that was far short of returns of 150 percent for Ford Motor Co. and 176 percent for Korea's Hyundai Mobis Co., the leaders of their segments.
But if retailers didn't have the highs of other sectors, they also didn't have the lows.
With the exception of Sonic Automotive Inc. of Charlotte, N.C., which posted a negative return over the latest three-year period, each of the six retailers tracked in the index posted a positive return over the quarter, one- and three-year periods.
GM-style value destruction
In contrast, consider General Motors Co.
The "new" GM went public too recently for its recent share-price gains to be included in the quarterly or one-year indices, and the entire global automakers three-year index was dragged down by the "old" GM's bankruptcy and subsequent loss of value.
PwC said in a release that retailers experienced strongly positive returns in all periods, which likely reflect, among other things, easier credit availability, a less competitive marketplace (as numerous auto dealerships were closed during the downturn) and improved profitability resulting from the realized benefits of financial and operational restructuring initiatives.
"Overall, the auto industry continued to exhibit strong shareholder return in the fourth quarter and all of 2010," PwC's Zaleski said. "Optimism has returned to the global auto industry." c
You can reach James B. Treece at jtreece@crain.com.
