European Carmakers and Suppliers: Fourth-Quarter Earnings and 2024 Guidance

As we embark on a new year, the anticipation surrounding fourth-quarter earnings and 2024 guidance from European carmakers and suppliers intensifies. It is no secret that the industry experienced a period of pent-up demand and constrained supply due to the lingering effects of the global pandemic. However, as the world gradually distances itself from prolonged lockdowns, these challenges are slowly diminishing. On the flip side, the growth of fully-electric vehicles, which has been one of the industry's main focal points, appears to be experiencing a temporary stall.

Analysts have weighed in on the matter and their predictions are somewhat mixed. They foresee a year of modest growth for carmakers, with a projected 2.8% increase in global car sales. This number is notably lower than the impressive 9% estimate recorded in 2023, as reported by S&P Global. In fact, Bernstein analysts recently highlighted their concerns about the European Union car sector, emphasizing potential minimal production growth, rising discounts, falling revenues, margins, and market shares.

Despite these apprehensions, there are particular companies that continue to capture the attention of analysts for various reasons. Stellantis, for example, faced some challenges in the second half of the year due to unfavorable exchange rates. However, RBC Capital Markets analysts commend the stock's long-term outlook for its strong returns and promising U.S. prospects. Similarly, Bernstein analysts express optimism about Stellantis' potential. On the other hand, Volkswagen seems to defy expectations as Jefferies analysts believe it may deviate from the projected trend of lower earnings this year. Factors such as good pricing power, an advantageous product mix, tailwinds from raw material prices, and an array of new models contribute to this positive sentiment.

As we await the unfolding of fourth-quarter earnings and eagerly digest the 2024 guidance, it is crucial to keep a close eye on these key players in the European car sector. The outcomes will undoubtedly shape the narrative for the year ahead and shed light on the direction of the industry as a whole.

Industry's Struggle Amid Cost-cutting Measures

The automotive industry continues to face challenges as companies adopt aggressive cost-saving strategies. Stellantis, Volkswagen, and Continental have all resorted to job cuts and production pauses to navigate through a period of low demand. Volkswagen has also scaled back production across its various plants. As the fourth-quarter earnings approach, cost-saving measures are likely to be discussed, alongside the anticipation for the 2024 guidance.

Electric Vehicles and Shifting Market

While electric vehicles (EVs) remain crucial to the industry's growth, short-term expectations have diminished due to decreased demand and rising costs. Carmakers face the challenge of balancing affordable prices for EVs with maintaining healthy profit margins. However, there is hope that the introduction of new, more affordable EV models this year and next will help boost consumer interest in electric mobility. Insights from the previous quarter and the carmakers' expectations for this year will provide valuable information on market trends.

Investors' Focus on Renault's 2024 Guidance

Investors are closely watching Renault's projected guidance for 2024, especially after the disruption caused by the cancellation of its initial public offering (IPO) plans for its electric-car unit, Ampere.

Upcoming Earnings Reports

Below are the scheduled earnings reports for select automotive companies:

• Ferrari: Feb. 1
• Michelin: Feb. 12
• Stellantis: Feb. 15
• Renault: Feb. 15
• Mercedes-Benz: Feb. 22
• Aston Martin: Feb. 28
• Continental: March 7
• Porsche AG: March 12
• Volkswagen: March 13
• BMW: March 21