The auto industry has delivered back-to-back negative quarters for investors. But the industry drifted down at about the rate of the broader equity markets in the second quarter.
Automakers and their publicly traded suppliers and retailers all saw overall shareholder value fall in the second quarter, according to the Automotive News /Pricewaterhouse Coopers Total Shareholder Return Index. The major stock indexes mirrored that weakness, with the Dow Jones industrial average down 2.5 percent and Standard & Poor's 500 Composite down 2.0 percent.
"There's macro instability with Iraq and commodity price increases," said David Hiemstra, manager of transaction services for PricewaterhouseCoopers.
Other auto industry issues making investors squeamish are high inventories, pensions and other retirement benefits, the weak U.S. dollar, and accounting restatements.
But all three segments of the industry delivered positive three-year returns. Only the automakers gave shareholders a negative one-year return.
Automakers saw their shareholder value dip 2.0 percent in the second quarter.
GM posted the highest return of the 14 automakers, with a 17.6 percent increase, largely on Kirk Kerkorian's bid for additional GM stock.
Ford Motor's 8.6 percent decrease was the largest of the group. Ford lowered its 2005 earnings guidance, eliminated bonuses for salaried management and again offered to bail out supplier Visteon Corp.
The group of 39 suppliers posted an aggregate loss of 2.5 percent in the second quarter led by Collins & Aikman Corp. The interiors supplier, which filed for Chapter 11 bankruptcy protection in May, saw its shareholder value plummet 94.3 percent.
Tenneco Automotive Inc. continued to improve, delivering the best return of the group at 33.5 percent. Aaron Witalec, transaction services senior associate for Pricewaterhouse-Coopers, chalks that up to the supplier's continued innovation in advanced emission-control products and shock absorbers, struts and vibration-control components.
The seven publicly traded dealership groups fell 0.2 percent in the quarter. Lithia Motors Inc., up 13.0 percent, bested the bunch. It was helped by a vehicle-exchange program with other retailers to balance inventory with customer demand.
CarMax Inc. had the worst return among the retailers, down 15.4 percent in the quarter. Yet, the company offered the best one-year return, up 21.9 percent, and its three-year return was up 23.1 percent.
|THE BIG PICTURE|
|Total shareholder return for automotive sectors vs. other averages; percentage change per period|
|Total shareholder return for largest global automakers; percentage change per period|
|Total shareholder return for largest global suppliers; percentage change per period|
|39||Collins & Aikman||–94.3||–98.8||–99.2|
|Total shareholder return for U.S. retail groups; percentage change per period|
|6||Group 1 Automotive||–8.6||–27.6||–37.0|
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