In 2024, European car manufacturers have faced significant challenges, with demand and price pressures leading to disappointing results, except for a few exceptions. Investors are now seeking clearer insights into the future of the automotive sector.
**Contrasting Performance**
In 2023, the European automotive sector showed resilience. On the Paris Stock Exchange, it was a standout performer. Stellantis soared by 59%, marking the largest increase on the CAC 40 index, while Renault outperformed the Paris market, climbing by 18%.
However, 2024 tells a different story. Since the start of the year, the Stoxx Europe 600 Automobiles and Parts index—covering both manufacturers and suppliers—has dropped by over 11%. Among the carmakers, the downturn has been particularly steep, with only two companies showing positive performance: Ferrari, up 37.65%, and Renault, up 3.9%.
**Challenges Ahead**
In July, Deutsche Bank warned that reducing excess inventory might require significant price cuts. The bank also raised concerns over Stellantis’ goal of maintaining a 10% operating margin in 2024, calling it “at risk.” In August, Bernstein echoed these concerns, suggesting that Stellantis is struggling to offload dealership inventories, hinting that “the worst is yet to come.”
**Investor Outlook for the European Automotive Sector**
With a difficult market landscape and company-specific issues, many are questioning the future of European car stocks. Is it time to abandon the sector?
“There’s undoubtedly a negative sentiment surrounding the automotive industry, largely due to the uncertainty we face. However, this is a sector driven by momentum,” explains Michael Foundoukidis.
“If good news starts to roll in—such as increased demand clarity, price stabilization, interest rate cuts, or regulatory easing—the sector could bounce back quickly, especially since current valuations are already quite low,” he concludes.