Global auto industry recovery gains traction
Shareholder return surpasses 26 industry groups tracked by BCG.
DETROIT, Mich. — The automotive industry has made quite a comeback since the financial crisis and recession of 2008/09. Original-equipment manufacturers (OEMs) and component makers delivered five-year median annual returns that were well in excess of the median annual return for 26 industries, according to a new report by The Boston Consulting Group (BCG).
The 2014 Automotive Value Creators Report: A Comeback in the Making notes OEMs produced a median annual total shareholder return (TSR) of 29% from 2009 through 2013, while component makers posted 33%. These results surpass the 21% for the 26 industries tracked by the global consulting firm based in Boston.
During 2008/09, the big three Detroit automakers posted nearly $75 billion in losses and unit sales plunged worldwide.
“The automotive sector has enjoyed a good run, but sustaining that standout performance will be a challenge,” said Xavier Mosquet, a BCG senior partner and a coauthor of the report. “OEMs and component makers will have to prioritize innovation to meet the needs of consumers.”
The report shows OEMs concentrated on emerging markets, producing a median annual TSR that ranged from 36% to 49% from a combination of margin improvement and sales growth.
Automakers that focused on global developed markets posted lower median annual returns that ranged from 23% to 35% by expanding their profit margins rather than increasing sales, and returning cash to shareholders through dividends and share repurchases.
BCG cited the importance of global scale, noting that from 2004 through 2013, the five largest-selling OEMs posted a 47% increase in combined unit sales.
Click here to download a copy of the report.