The 81st Geneva Motor show kicked off last week and runs until March 13. Among some 170 new models, clean engines and hybrid vehicles abounded, yet the hype focused on the revival of the power sports cars. Faced with macro-economic headwinds, we look at investor sentiment in a clutch of the global players including Volkswagen Ag (ETR: VOW), which announces results this week, Porsche (ETR: PAH3), General Motors Co. (NYSE: GM), Fiat Spa (BIT: F), Ford (NYSE: F), Renault Sa (EPA: RNO) and Toyota Motor Corp. (TYO: 7203).
The New York Times reported that the mood of carmakers at the Geneva show was nervously confident. Global sales are up, emerging markets are booming and the car companies are introducing fleets of new models. Yet oil prices are soaring, pushing buyers toward less profitable smaller cars. The Middle East is in turmoil, and economic recovery in the United States and Europe is still spotty.
Among the reported stars of the show, was Volkswagen Ag, whose Bulli, a contemporary take on the old minibus much loved by hippies in the 1970s took the spotlight. The group, which also showcased its new Lamborghini Aventador, has been in the news for reasons other than its automotive innovation. It announced progress on its much anticipated merger with Porsche following the takeover of Porsche's automobile trading business for USD 4.5 billion. Investor sentiment towards Volkswagen shows short interest at an annual low of 0.5% of total shares outstanding on loan, which represents a quarter of the available supply of stock that can be borrowed. Funds who lend have remained static, presumably waiting for clarification on the Porsche transaction.
Porsche showcased a hybrid in its four-door coupe, the Panamera and its new 911 sports model, which is available in any color so long as it’s black! The shares have fallen since mid-February although short interest in Porsche held steady this year at just over 1% of total shares outstanding on loan, while long only investors have increased their holding by 2 million shares to 21.3% of total shares.
Despite industry group Acea showing that European registrations of Fiat, Lancia and Alfa Romeo cars are down 20% year on year in January, the FT reported ambitious plans by Fiat Spa. The Italian based manufacturer announced that it aims to renew its entire range by 2013 as it seeks to bolster sagging sales with the help of its US partner Chrysler. Investors remain skeptical as short interest more than trebled from 2% of total shares out on loan in January to 6.2%, after the price dropped. Long only funds who lend have reduced holding this year by a tenth to 16% of total shares.
The WSJ reported comments from General Motors CEO in Geneva noting that the US Auto industry is not yet prepared to respond to a major surge in gas prices, though car makers are in a better position than when prices spiked in 2008. The press highlighted that General Motors was rising to the hybrid challenge and is set to address the fortunes of its Opel brand in Europe. The company recently announced its first full-year profit since 2004 and the FT printed comments hinting the company would report a strong first quarter. Investors seem to agree, with short interest holding steady at 1% of total shares outstanding on loan after falling from a 4% high in December, following the float. Funds who lend have increased their holdings by 50% in late November to 120 million or 7% of total shares.
Another US giant, Ford has seen short interest reduce from a high in late November of almost 14% to 5.5% of total shares outstanding on loan. This is despite the share price having fallen from almost USD 19 to just over USD 14 since the beginning of February. It is worth pointing out that the company has convertible bonds in issue. Funds who lend have been supportive over the last year, increasing their holding from 600 million shares to almost 750 million. However, the beginning of February marked a turning point and they reduced to just over 650 million shares or 20.7% of the company.
While allegations of industrial espionage emanating from French car maker, Renault Sa seem to have died down, the shares have fallen from their recent annual high of EUR 50. Short interest has fallen steadily since the high last September of 5% to 1.8% of total shares outstanding on loan.
Finally, Japanese giant, Toyota has seen its share price recover from the last year’s low, following the fallout from its substantial recalls. The company announced US sales in February had increased by 42%, although this was supported by heavy discounting. Looking at investor sentiment, we see support from long only funds who lend, with holdings having shot up from 280 million shares in September to 320m or 9.26% of total shares. Short interest remains low and we observe a similar pattern at Honda and Nissan Motor Co ltd.
