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GM Beats Ford 10 Years Hence, But Germans Win Overall

Peugeot Comes Last, Closely Followed By Fiat
Even $200 A Barrel Oil Scenario Has BMW Leading Followed By VW

General Motors will leap over Ford in the eyes of investors in the race to create value by 2022, although both lag well behind German winners Volkswagen and BMW in second place, according to a report from Morgan Stanley.

Dead last in the ratings is Peugeot-Citroen of France, while Fiat-Chrysler is second from bottom.

Morgan Stanley used criteria like the oil price, economic growth, emerging markets versus mature market growth, and technology and asked its in-house experts to rate the world’s global auto manufacturers and suppliers 10 years from now. The experts rated 60 big automotive companies on four points – technology, geographic footprint, strategic positioning and financial strength.

Toyota and Nissan of Japan performed strongly and were rated third and eighth, while Hyundai and Kia of Korea were fourth and tenth. GM was in fifth place, while Ford languished down in the middle ranks alongside another surprise loser, Honda.

$200 oil
Electric car maker Tesla Motors of California was close to the bottom too, although a separate scenario, which sought to evaluate a reaction to a surge in the price of oil to $200 a barrel, put the company in fourth place. But even this crisis scenario had the Germans at the top, albeit with the roles reversed from the main prediction with BMW in top spot and VW second.

Next year BMW launches its electric sub-brand with the little i3 battery-powered city car. The following year it will launch the i8 plug-in hybrid supercar.

“If our conclusions prove right, VW and BMW offer an outstanding long-term investment opportunity as current valuations do not reflect their strong positioning,” said Morgan Stanley.

“GM’s large lead over Ford surprised us, standing in sharp contrast to today’s investor perceptions,” said the investment banker.

“European volume players and non-J3 (big three) Japanese manufacturers ranked low overall, suggesting high investment risk or strategic changes ahead,” Morgan Stanley said.

“Best-positioned: Volkswagen, most challenged: Peugeot. From the competitive crucible of Europe emerge the world’s highest (VW) and lowest (Peugeot) ranking auto companies. Is VW’s drive for scale the cause of Peugeot’s weakness?”

“BMW’s reputation as the “ultimate driving machine” has vaulted it into contention as the ultimate auto company, trailing only VW. Yet VW and BMW are among the cheapest stocks in the industry. (Mercedes parent) Daimler consistently lagged its German peers in our scenario rankings,” the report said.

GM’s geographic footprint
“In the U.S., Ford is widely believed to be the class of Detroit, yet ranks well below GM in all scenarios due to its lagging geographic footprint. From Japan, only Toyota and Nissan rank with the leaders, while Honda lags far behind,” the report said.

Neil Winton – June 15, 2012

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