For industry executives charged with boosting shareholder return, 2008 was a lost year — to put it mildly.
Value simply evaporated — at Japanese automakers, American car dealerships, even at conservative Rieter Automotive Management AG, a Swiss supplier of highly engineered components.
So merciless was the market last year that only one automotive stock gained value, according to the latest Automotive News/PricewaterhouseCoopers Total Shareholder Return Index.
That stock was Volkswagen AG.
Thanks to a brief period of frenzied speculation in VW stock in Germany as Porsche AG maneuvered to wrest control of its mass-market cousin, VW's shareholder return closed the year 54.6 percent higher than in January 2008.
But that solitary gain is all but hidden in a sea of losses.
BMW AG lost nearly half of its return for the year, according to the index. France's high achiever of recent years, Renault SA, saw an 80.6 percent drop in shareholder return. Japan's previously bulletproof suppliers, Tokai Rika and Toyota Boshoku, both lost about three-fourths of their return.
Despite a strong position in healthy import brand dealerships, shareholder return at Penske Automotive Group Inc. plunged 54.7 percent, according to the report.
It may be the supplier segment that stings hardest and longest from 2008's burn, says Darrell Kennedy, PricewaterhouseCooper's manager of transaction services in Detroit. To fund mergers and acquisitions, suppliers rely heavily on capital infusions from outside investors, Kennedy says.
"The supplier segment was already struggling in recent years to keep moving," he says. "But if they have lost so much value now that they can't attract outside capital, they're going to have to rely simply on internal liquidity and long-term improvements in cash flow to fund their expansion. And that's going to be very challenging."
The downturn in shareholder performance continued through year end, with the average global supplier losing nearly 36 percent of its total return in the last three months of 2008.
One positive consideration, Kennedy adds, is that many of the world's automotive companies remain fundamentally strong and well-managed.
"It's entirely possible that some of these stocks will bounce back as quickly as they collapsed," he says. "Probably not in the next 90 days. But over the next six to nine months as the economy settles down, investors could easily see some of that lost shareholder value restored."