Overcapacity (Light Vehicle) - Thematic Research

Summary

There are some 600 light vehicle manufacturing plants in the world, spread through 44 countries. Together the plants have the capacity to manufacture over 130 million vehicles a year. Given that 88.8 million vehicles were manufactured in 2019, utilization of just 67% was achieved, with vast discrepancies between company and geographic performance. Moving into 2020, it’s estimated that between 72 and 74 million light vehicles will be manufactured dragging utilization down disastrously. The industry’s rule of thumb is that utilization needs to be sustained at the 75-80% level to achieve profitability due to the high fixed capital costs and variable costs associated with manufacture. Excess capacity is a two-way drag on profitability - from the cost perspective as outlined previously - and because, as basic microeconomics teaches us, excess supply brings downward pressure on prices.

The algorithms in the publisher’s “thematic engine” help to clearly identify the winners and losers within the TMT sector. The publisher's 600 TMT stocks are categorised into 18 sectors. Each sector scorecard has a thematic screen, a risk screen and a valuation screen. The publisher's thematic research ecosystem has a three-tiered reporting structure: single theme, multi-theme and sector scorecard. This report is a Multi-Theme report, covering all stocks, all sectors and all themes, giving readers a strong sense of how everything fits together and how conflicting themes might interact with one another.

This report is part of the ecosystem of thematic investment research reports, supported by the publisher's “thematic engine”.

Scope

• The publisher has developed a unique thematic methodology for valuing technology, media and telecom companies based on their relative strength in the big investment themes that are impacting their industry.
• Whilst most investment research is underpinned by backwards looking company valuation models, the publisher’s thematic methodology identifies which companies are best placed to succeed in a future filled with multiple disruptive threats. To do this, the publisher tracks the performance of the top 600 technology, media and telecom stocks against the 50 most important themes driving their earnings, generating 30,000 thematic scores.

Reasons to Buy

• The publisher's thematic investment research product, supported by their thematic engine, is aimed at senior (C-Suite) executives in the corporate world as well as institutional investors.
• Corporations: Helps CEOs in all industries understand the disruptive threats to their competitive landscape
• Investors: Helps fund managers focus their time on the most interesting investment opportunities in global TMT.
• The publisher's unique differentiator, compared to all their rival thematic research houses, is that the publisher's thematic engine has a proven track record of predicting winners and losers.