Last year was disappointing for investors in publicly traded automotive companies.
Despite the best year in history for U.S. new-car and truck sales, and banner years for markets around the world, more than half of the world's automakers watched their stock value decline.
Figures from the Automotive News/PricewaterhouseCoopers Total Shareholder Return Index make it glaringly obvious that the achievements of the auto industry and their results on the stock market don't necessarily go hand in hand. Among the auto ironies:
While suppliers around North America worked overtime delivering parts to automakers, more than a third of their total shareholder value evaporated in global equity markets last year.
American auto retailers continued losing their value, even though record numbers of consumers lined up for new cars and trucks.
And while automakers posted huge profits and maneuvered to do business in the 21st century, their performance in shareholder value was far worse than the industrial economy in general.
According to the Automotive News/PricewaterhouseCoopers index, the global automakers of the world delivered a minus-22.9 percent performance last year and less than a 12 percent return over the past three years. By comparison, the Dow Jones industrials were up 43 percent over the past three years and down just 4.5 percent last year.
Why the paradox?
Michael Burwell, a partner at PricewaterhouseCoopers, says automotive stocks have simply been the victims of lousy timing.
'Even though these companies have been performing well for the past three years, with the biggest volumes and profits in their history, investors have put their money elsewhere,' Burwell says. 'Their performance unfortunately occurred against the backdrop of dot-com mania.'
But, he adds, that can change.
'The bad news we've seen in recent weeks about the dot-com companies could change investors' thinking,' he says. 'They may decide a business needs more in the way of bricks and mortar to be of value.'