[ad_1]
Courtesy of Ford
Text size
Ford engine
(F) changes his C-suite: Bob Shanks leaves his role as CFO, instead of Tim Stone, who will succeed him on June 1. RBC analyst Joe Spak not surprised by the move; after all, Shanks is 66 years old.
"Stone is an outsider of the automobile," writes Spak about his replacement. "He recently held a position as SNAP's Chief Financial Officer and had previously 20 years of experience in finance at Amazon."
There have been a lot of changes in the executive suites of automakers lately. Some, like Stone, are definitely strangers. A new group of faces is driving the industry into the era of electrification, carpooling and autonomous driving. But the main question for investors is not about technological change: it's about whether the new management can get the industry's returns.
Read more: Tesla, GM and Lear look good bet on the future of transportation
The average mandate of a CEO in the
S & P 500
is about seven years old. In the automotive sector, this number is closer to three years.
General Motors
Executive Director (GM) Mary Barra has been at the helm for 3.2 years. Mike Manley took over at
Fiat Chrysler
(FCAU) for the late and legendary Sergio Marchionne less than a year ago. Ford CEO Jim Hackett has been in the job for 1.8 years.
This phenomenon is not limited to the United States. Thierry Bollore took over at
Renault
(RNO.France) for Carlos Ghosn at war this year. Harald Kruger ran
BMW
(BMW.Germany) since 3.8 years and Herbert Deiss ran
Volkswagen
(VOW.Germany) for less than a year.
What about
Toyota engine
(TM) and
Honda engine
(HMC)? Their CEOs served 5.8 and 3.8 years of work, respectively.
He is often criticized for the turnover of the financial director of his own company, but the new former leader of the industry is
You're here
(TSLA) Elon Musk. Musk has been running his electric car business for over 10 years. This is a different way of looking at Tesla's place on the market.
The new strategic direction in the automotive industry counts for investors. Listed companies generate revenues of more than $ 1 trillion, a combined market value of $ 300 billion and sell more than 49 million cars a year.
And the new management wants to invest in new technologies. BMW plans to produce 25 electric models by 2025. Volkswagen is planning 70 by 2025. Ford has announced $ 11 billion in electric vehicle development and GM will launch a 100% electric Cadillac from here 2021 or 2022.
It is clear that electric vehicles are coming. What is less clear is that the new technology will be a boon for investors. The average return of automakers' assets in 2018 was about 3%, less than half the yield produced by S & P 500 companies on average. That's why GM is trading less than six times the estimated profit for 2019.
In the automotive industry, some investors will favor suppliers, such as the manufacturer of autonomous driving components.
Aptiv
(APTV). Still others will prefer Lyft, which will price its initial public offering next week. However, some will give a chance to the new direction of automakers. Who knows? Maybe new leaders can change the fortunes and valuation multiples of their businesses.
Write to Al Root at [email protected]
[ad_2]
Source link