The auto industry performed poorly for investors in the third quarter.
The shareholder value of global automakers and U.S. dealership groups trailed leading market indices in the quarter ended Sept. 30, according to the Automotive News/PricewaterhouseCoopers Total Shareholder Return Index. Automakers' returns dropped 4.4 percent in the quarter. Retailers' value fell 5.6 percent.
Global suppliers dipped 2.2 percent but edged out the Dow Jones industrial average, which fell 2.9 percent.
"Macro factors affecting all companies are affecting auto companies as well - higher commodity costs, (U.S. presidential) election uncertainty," says David Hiemstra, manager of transaction services for PricewaterhouseCoopers in Detroit.
Suppliers are feeling the pinch from high steel and oil prices because of their fixed contracts with automakers.
"Suppliers have to absorb the costs until they can renegotiate contracts or get a surcharge," Heimstra says.
Aaron Witalec, transaction services senior associate for PricewaterhouseCoopers, also warned about plastics. "Plastic prices will increase a little more because oil is a big raw material when making plastic parts," Witalec says. "Increased oil prices could affect the bottom line to the extent plastics are being used."
The PricewaterhouseCoopers analysts point to additional reasons for the auto industry's weaker returns. That includes the continued use of incentives, higher international shipping rates and the weaker U.S. dollar.
Jay Singer, transaction services director for PricewaterhouseCoopers, says, "Results are being dictated not by the top line but by the cost side of the equation."
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