Investing in Car Stocks

Roberto Rivero

The automobile industry is one of the largest in the world, with even the more moderate sources estimating more than $2.5 trillion revenue worldwide in 2023. The bulk of the market is still composed of petrol and diesel vehicles but, naturally, we are starting to see consumers pivot increasingly towards electric vehicles (EVs).

However, that doesn’t mean that legacy automotive stocks don’t have anything to offer during the energy transition and, indeed, afterwards. Keep reading to learn about investing in car companies and to see some examples of the best car stocks to watch in 2024.

Why Invest in Car Stocks

The automotive industry is going through an important transition. As we move towards a lower-carbon world, EVs are starting to account for an increasing proportion of new vehicle purchases around the world.

With electric and hybrid vehicles gaining market share and various economies, including the UK and the EU, implementing legislation that will ban the sale of new petrol and diesel cars in little more than a decade, it might seem as if legacy automakers have little to offer investors over the long-term.

However, this is not necessarily true. Although there may be a closing window on new petrol and diesel cars, they will continue to be produced and sold before bans come into place. Furthermore, whilst they may have been slower to move into the EV market, legacy automakers are starting to make serious headway. Indeed, many are starting to produce and sell serious numbers of electric and hybrid vehicles.

Unlike smaller, start-up EV manufacturers, many of the large legacy automakers have lots of cash and plenty of other resources to throw at producing electric vehicles. Moreover, many of these companies, particularly producers of luxury vehicles, enjoy a certain degree of brand loyalty, which may also give them a leg up in the growing EV market.

Consequently, rather than being a reason to avoid legacy car stocks, the transition to EVs may represent an exciting opportunity for growth for these companies.

The Best Car Stocks to Watch

In the following sections, we will take a look at 4 top car stocks for those interested in investing in the automotive industry to watch in 2024. As well as taking a look at how the companies are performing, we will also take a look at their progress in transitioning to producing EVs.

Volkswagen Group

As well as its namesake vehicles, the Volkswagen Group counts Audi, Bentley, Seat and Skoda amongst its brands. In terms of number of vehicles sold, Volkswagen is the second largest automobile company in the world. It’s also made considerable inroads into the EV market.

In fact, in 2022, VW was the third largest manufacturer of EVs (all-electric vehicles and plug-in hybrids) in the world, second only to Tesla and Chinese EV giant BYD. In the first nine months of 2023, deliveries of all-electric vehicles (BEVs) increased by 45% to 531,500 vehicles, which accounted for 7.9% of total deliveries. By 2030, VW is aiming for BEVs to account for 80% and 55% of its European and North American sales respectively.

Whilst sales revenue over this time period climbed 16% to €235.1 billion, higher costs caused operating profit to drop by 7% to €16.2 billion. VW also has a history of paying dividends, with a dividend yield of 7.4% at the time of writing.

Stellantis

Although there is a chance you may not be familiar with the next name on our list of car stocks, you’re likely to recognise many of its brands, which include Citroën, Fiat, Maserati, Peugeot and Vauxhall.

In terms of sales, Stellantis is the fourth largest automobile producer in the world, shipping 3.2 million vehicles in the first half of 2023. In terms of the transition to EVs, Stellantis finds itself behind VW, but with equally lofty ambitions. In 2022, the company sold 288,000 BEVs worldwide, but is aiming for this number to hit 5 million in 2030.

In the first half of 2023, total revenue rose 31% to €98.4 billion, with operating profit also rising 11.8% to €13.5 billion. At the time of writing, Stellantis has a dividend yield of 7.2%.

Depicted: Admirals MetaTrader 5Stellantis Weekly Chart. Date Range: 17 January 2021 – 27 December 2023. Date Captured: 27 December 2023. Past performance is not a reliable indicator of future results.

Porsche

Having looked at two of the world’s biggest car stocks in terms of sales, we’ll now move onto two comparatively smaller companies in terms of sales, but larger in terms of market capitalisation, both of which would fall into the category of being luxury goods.

Porsche’s status as a luxury good affords it two potential benefits. Firstly, luxury goods are considered by many to be defensive in nature, as their demand is not as adversely affected by a weakening economy. Secondly, luxury brands typically have higher pricing power, meaning that their profit margins tends to be higher. We can see recent evidence of both of these benefits.

Until recently, Porsche was a fully owned subsidiary of VW. However, in 2022, Porsche went public on the Frankfurt Stock Exchange, with VW retaining 75% ownership. Whilst Porsche was still fully owned by Volkswagen, we can see an example of the robust demand its brand produced during a time of economic turmoil.

In 2020, the year the Covid-19 pandemic spread around the globe, sales for Volkswagen brands Skoda, VW and Seat toppled by 20%, 22.9% and 27.5% respectively. Although Porsche sales also dropped, it was by a far more modest 4.2% and, despite the drop in sales, revenue actually remained flat (an example of the brand’s pricing power).

Furthermore, in the first half of 2023, Porsche reported revenue of €20.4 billion, an increase of 14%, and operating profit of €3.9 billion, an increase of 11%. This equates to an operating margin of 19.1%. Compare this with Stellantis’ operating margin of 13.7% over the same time period and Volkswagen Group’s 7.1% in the first nine months of 2023.

Depicted: Admirals MetaTrader 5 – Porsche Daily Chart. Date Range: 29 September 2022 – 27 December 2023. Date Captured: 27 December 2023. Past performance is not a reliable indicator of future results.

Porsche has already begun producing, selling and delivering BEVs. Despite representing 11% of total deliveries in the first half of 2022, the number of deliveries of Porsche’s BEV model, the Taycan, fell 4.7% year on year. However, Porsche blamed this fall in deliveries on limited available parts rather than a lack of demand, something which was evident from its 8.8% increase in sales. At the time of writing Porsche has a dividend yield of 1.2%.

Ferrari

The second of our two luxury automotive stocks is another company which needs little introduction, Ferrari.

In the first nine months of 2023, revenue was reported at €4.4 billion and operating income at €1.2 billion, increases of 19% and 34% respectively. These numbers gave Ferrari an operating margin of 28.0% over the time period, which is one of the highest operating margins amongst car stocks.

Ferrari is yet to actually produce a BEV, but plans to do so by 2025. It further plans for 40% of all sales to be BEVs by 2030. At the time of writing, Ferrari has a dividend yield of 0.5% and has been enjoying a particularly good spell in the stock market.

Depicted: Admirals MetaTrader 5 – Ferrari Weekly Chart. Date Range: 25 June 2017 – 27 December 2023. Date Captured: 27 December 2023. Past performance is not a reliable indicator of future results.

How to Invest in Automotive Stocks

With an investing account from Admirals, you can buy shares in all of the automotive stocks examined in this article. In order to get started, follow these steps:

  1. Open an Invest.MT5 account.
  2. Log in to the Dashboard.
  3. Open the MetaTrader WebTrader.
  4. Search for the car stock and click its symbol to open a price chart.
  5. Press ‘Create New Order’, enter the number of automobile shares and hit ‘Buy’!
Depicted: Admirals MetaTrader WebTrader – Volkswagen AG H1 Chart. Date Captured: 27 December 2023. Past performance is not a reliable indicator of future results.

Investing with Admirals

With an Invest.MT5 account from Admirals, you can buy shares in more than 4,500 companies and over 200 Exchange-Traded Funds (ETFs). Click the banner below to open an account today:

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

FAQ - Auto Stocks

What Are the Top 4 Automotive Companies?

The 4 largest automotive stocks by market capitalisation are Tesla, Toyota, BYD and Porsche.

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  • With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  • The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  • Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
TOP ARTICLES
The Best Cobalt Stocks to Watch
Cobalt is a metal which is poised to play a key role in the global energy transition, due to its use in lithium-ion batteries. So, how can investors gain exposure to this metal? In this article, we will examine 2 top cobalt stocks for investors to consider and demonstrate how to invest in cobalt sto...
Investing in Utility Stocks
Utility companies are responsible for providing households and businesses with electricity, gas, water, waste disposal and other necessary services in the modern world. Whilst investing in utilities may not be considered as exciting as other industries such as technology, utility stocks can form par...
Top 3 Best Tin Stocks to Watch
When talking about valuable metals, tin is hardly the first one that comes to mind. But this commodity has been drawing attention from investors recently. The best tin stocks to watch have become an interesting alternative if you are looking for ways to diversify your portfolio within the precious...
View All