Global automotive stocks took a pounding in the third quarter, part of a broad downturn in financial markets.
But the global automakers, global suppliers and U.S. retail groups that make up the Automotive News/PwC Shareholder Value Index fared worse than most financial indexes from July 1 through Sept. 30
Total shareholder value for the publicly owned automakers plunged 16 percent, and suppliers fell 12 percent in the quarter. The auto retail sector, comprising six U.S.-based public companies, was down 7.4 percent for the third quarter.
During the quarter the S&P 500 was off 6.4 percent, the Dow Jones dipped 7 percent and the U.K.’s FTSE 100 fell 6.1 percent.
Total shareholder return shows how the value of an investment changes by incorporating share price appreciation and reinvestment of dividends.
This year “has been riddled with dramatic headlines,” says an analyst note by Autofacts, PwC’s auto forecasting unit. “First the rapid decline of the Russian market, [then] the ongoing contraction of the Brazilian automotive industry and concerns regarding the slowdown of the Chinese market.”
U.S. light-vehicle sales are up for the sixth straight year and investors are watching for the first signs of peaking.
But beyond the fourth quarter, Autofacts sees mostly positive signs.
Worldwide, sales of new vehicles have grown 2.1 percent this year, but Autofacts expects 2016 and 2017 to “return to a healthier level of 5.1 percent and 4.7 percent growth rate as crisis markets stabilize.”
Autofacts says the growth will be concentrated outside traditional markets, requiring automakers to be mobile and agile.
In traditional markets, it expects Europe’s rebound to continue beyond an expected 7.3 percent 2015 uptick. But it expects Japan to remain below its 2014 surge as consumers made purchases to beat a hike in auto sales taxes.
Autofacts expects continued political unrest and economic contraction in South America in 2016, especially in Brazil.
But the outlook for China is more upbeat. Autofacts believes the country’s summer slowdown is largely over. It forecasts moderate full-year growth of 4.6 percent in auto assembly. Autofacts also sees positive signs of improving consumer confidence in India.
Global automaker returns plummeted 16 percent in the third quarter. The only exception was Hyundai, up 14 percent. Despite that, the South Korean company is down 21 percent over 12 months and off 36 percent over three years.
Volkswagen AG shareholder value plunged by almost half in the third quarter, after the company admitted it had rigged 11 million diesel vehicles to cheat on emissions testing. VW is down 42 percent over 12 months and almost a quarter over three years.
Automakers are the only segment to drop over 12 months, off 8.3 percent. The sector is up 35 percent over three years, although suppliers and retail groups did even better over that period.
Global suppliers fell 12 percent for the third quarter. Only six of the 41 publicly held companies in the index finished in positive territory. Hyundai-WIA, a machine toolmaker, led the third-quarter winners with a 23 percent bump, although that was recovery. The company is down 45 percent over 12 months and 33 percent over three years.
Twenty-eight suppliers saw double-digit declines in total shareholder value in the quarter. But the group has been healthy when viewed over longer periods. Suppliers are a collective 1.7 percent better over 12 months and 74 percent higher over three years.
Returns for publicly owned auto retailers declined 7.4 percent in the third quarter. But the group is 20 percent higher for one year and 80 percent for three years, reflecting investor recognition that auto dealerships have revenue streams beyond new-vehicle sales.
Lithia Motors leads the retail group across all periods, down 4.3 percent for the quarter but up 44 percent for a year and tripling returns over 36 months.