A high-end motor car is a significant luxury purchase. If you love your wheels, should you buy shares in the manufacturer? Investing in the motor industry is tricky, since these companies are known for their unreliable profit margins.
The dominant luxury-car companies are both German: Daimler (Mercedes) and BMW. These are well-run outfits, and easily bought on the Frankfurt exchange, but neither has made investors any money in the past decade.
If you love your Lexus or your Audi you can’t invest directly, because they’re just divisions of Toyota and Volkswagen, respectively. Both giants make a load of non-luxury vehicles too.
Uber’s listing on the New York market is slated for the second half of 2019. That could be the investment opportunity of a lifetime
Ferrari has had a successful listing in New York since 2015, with the share code Race. Aston Martin recently listed in London.
Porsche belongs to Volkswagen and so do Bentley, and Lamborghini. Jaguar belongs to Tata.
Elon Musk’s Tesla is an interesting case. Its Model S, X, and 3 vehicles are selling well, and if the future is electric, that’s the place to be. However, Shares of Tesla fell 9% in early January because it delivered only 90 700 vehicles in the fourth quarter, slightly fewer than expected. The problem isn’t that the company is growing: it’s that the share price already assumes spectacular progress.
Perhaps the time to own a fancy car and invest in the industry is over? Uber’s listing on the New York market is slated for the second half of 2019. That could be the investment opportunity of a lifetime.
• Paul Theron is the founder and CEO of Vestact Asset Management.
- From the February edition of Wanted 2019.