All auto sectors deliver strong 1st-qtr. returns
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Shareholder values turned upward in the first quarter in all automotive sectors after six months of mixed or losing results.
Automakers, suppliers and retailers all posted substantial returns for investors in the quarter, as measured by the Automotive News-PwC Shareholder Value Index.
"The automotive sector regained traction, led by the global [Original Equipment Manufacturer] index," said Jeffrey Zaleski, PwC partner for transaction services. "Its 25.7 percent growth exceeded the returns of all major market indicies in the quarter."
For the quarter, publicly held global suppliers gained 17.7 percent while public U.S. retailers showed a more moderate 7.7 percent return.
Over the three years since the first quarter of 2009, shareholder returns for all three groups have rebounded dramatically. Global automakers have almost doubled in value, jumping 85.8 percent in the period. Returns for retailers have more than tripled and suppliers almost tripled over the past three years.
But for the one-year period, results are mixed. Returns for automakers were essentially flat, ticking up a scant 0.3 percent. Supplier returns declined 3.8 percent while retailers' return to shareholders jumped 16.1 percent.
"The slowdown in the broader global economy during the middle of 2011 partially contributed to these mixed results," Zaleski said. "Also weighing on returns was economic uncertainty over rising debt in the United States, similar fears and concerns in Europe and continued capacity constraints in Japan."
Automakers rising
Darrell Kennedy, PwC director of transaction services, thinks the strong first-quarter results for automakers reflect regional differences.
In the first three months, publicly owned Asian automakers returned an average 18.8 percent; Europeans, 31.6 percent; and North America's Ford Motor Co. and General Motors, an average 21.6 percent on continued U.S. sales growth.
Automakers in Asia "saw higher returns as Japan and Thailand continue to recover from natural disasters," he said. "European debt, although still a concern, appears somewhat contained."
Suppliers mixed
Investor returns have been mixed for global parts suppliers. Shareholder value was up sharply for both three years and the first quarter, but the sector lost ground over one year. In the first quarter, returns rose for 35 of 37 publicly owned parts makers, an average gain of 17.7 percent.
"North American and European suppliers drove the segment with the most favorable returns in comparison to the Asian peers," Zaleski said. "In particular, Meritor, Continental and Delphi led" with returns of 50 percent or more.
Delphi rejoined the index after its shares began trading again in November 2011.
Retailers strong
U.S. automotive retailers have been the best performing sector in the past three years, with stronger returns and less volatility than automakers and suppliers.
Shareholder returns have been positive in all three periods, more than tripling since the first quarter of 2009 while rising a more moderate 16.1 percent in the past year and 7.7 percent during the first quarter.
In the first quarter, four of the six largest public dealership groups posted gains of 20 percent of more, led by Penske Automotive Group's 28.5 percent. Asbury Automotive, Sonic Automotive and Lithia Motors followed. Group 1 Automotive gained 8.7 percent while AutoNation, volume leader for all dealership groups, dropped 6.9 percent in the quarter.
"Retailers continue to benefit from low interest rates, increased leasing, availability of credit and changes to the vehicle mix," Kennedy said.
With rising fuel prices, he added, consumers looked for smaller and more fuel-efficient cars and traded-in crossovers and SUVs.
You can reach Jesse Snyder at jsnyder@crain.com.
