December 12, 2019

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Innovest Releases 5-Year Auto Industry Outlook

Submitted by: Innovest Strategic Value Advisors, Inc.

Categories: Ratings & Awards, Socially Responsible Investing

Posted: Sep 12, 2007 – 10:14 AM EST

 

Calling winners and losers in the race to win at $6 gasoline

Sep. 12 /CSRwire/ - NEW YORK, NY - September 12, 2007 - Innovest Strategic Value Advisors, Inc. has released its latest report on the global Auto industry, featuring Innovest’s 5-year auto market outlook. Innovest’s market scenario envisions $6/gal gasoline prices in the US and tightening fuel economy rules in the US, EU, Japan, and China. The report forecasts market share changes based on each company’s progress on commercializing high mileage powertrains including hybrids, plug-in hybrids, clean diesel, hydrogen, and batteries.

The report's lead author, Senior Analyst Dan Moran says, "The end of cheap gasoline creates a game-changing challenge to the auto industry that will realign profit and risk opportunities over the next decade."

Forecasting changes in market share derived by exposure to high growth powertrain and geographic segments, the report identifies which companies are best positioned to outperform rivals.

Winners and Losers

Toyota and Honda earn AAA ratings as they are several years ahead of competitors on hybrids and building highly efficient engines. Toyota is making steady progress toward a plug-in version of its popular Prius, and will likely beat GM to market, or at least at a lower price point, on its plug-in when available in 2011. Renault was rated AAA for its leadership in passenger car clean diesels, which are likely to enjoy vigorous demand worldwide since diesel offers 30% better mileage than gasoline. Ford was downgraded to B because of the company’s continued emphasis on trucks and heavy vehicles and its big bets on biofuels.

"'Investing' in biofuel engines is an inexpensive way to sound green while passing up opportunities to invest in true fuel efficiency improvements," says Moran. "Biofuel-capable engines are attractive for US automakers since they exploit a CAFE loophole to inflate fleet mileage figures, but they don’t offer better fuel economy and therefore won’t help sell more cars to consumers sensitive to fuel prices. R&D money is more wisely spent on almost any other powertrain technology."

BMW and Porsche fare poorly since the companies have little exposure to emerging markets growth, and though BMW has big bets on hydrogen neither company invests strongly in near-term fuel saving technologies.

Medium Term Issues Drive Short Term Prices

A focus on medium term competitiveness appears to pay off even in the short term. Innovest has been tracking medium-range issues for automakers for a decade and identifying superior returns. On a rolling basis Innovest's top-rated auto companies have outperformed their sector peers by over 10% per year, over a full 10 year cycle.

Downloadable reports for companies in the sector and more are available for purchase through Innovest's partner http://www.csrwire.com/reports/independent

About Innovest

Innovest Strategic Value Advisors is an internationally recognized investment research and advisory firm specializing in analyzing companies’ performance on environmental, social, and strategic governance issues, with a particular focus on their impact on competitiveness, profitability, and share price performance. By assessing differentials typically not identified by traditional securities analysis, Innovest’s IVA ratings uncover hidden risks and value potential for investors. Innovest was judged the #1 global provider of "extra-financial" research in the Thomson Extel 2006 survey of institutional investors.

For more information, please contact:

Peter Wilkes Innovest Strategic Value Advisors
Phone: 212-421-2000 x216
Andy White Innovest Strategic Value Advisors
Phone: 44 20 7073 0469

 

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