Car stocks offer investors the chance to back companies with international renown. But the global performance of this industry can be inconsistent and isn’t immune to market-impacting events.
Most carmakers have relatively thin profit margins, but have been considered a reliable investment for decades. Car and auto stocks are considered to be cyclical stocks, which means they generally rise and fall as consumer confidence changes.
When the economy is doing well, people are more likely to buy new vehicles, which can have a positive impact on auto share prices. When the economy is doing poorly, people are unlikely to buy new cars, and auto stocks may suffer as a result.
The rise of electric and hybrid vehicles has also had a huge impact on car stocks, with companies like Tesla (TSLA) reaching huge valuations due to investor confidence in the future of electric cars. Most of the world’s largest car manufacturers now produce electric vehicles, and this is likely to have a significant impact on the price of car stocks in future.
The UK has a proud automotive tradition, and there are a number of popular UK car stocks that are listed on the London Stock Exchange, including:
The celebrated German vehicle manufacturer might be best known for its iconic Beetle, Combi and Golf models, but it’s now set its sights on Tesla’s E.V. crown. The company is emerging from a difficult chapter in its evolution after the lengthy emissions scandal which dragged on for several years. Read our full guide to buying Volkswagen shares.
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Tesla is a multinational automotive and energy company, specialising in electric vehicles, energy storage and solar panels. The company is on a mission to “accelerate the world’s transition to sustainable energy”. Tesla’s fortunes have at times been tied to the very public activities of its CEO (or perhaps that should be “Technoking”), Elon musk. For more information on buying shares in Tesla, you can check out our specialised guide to Tesla shares.
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The Japanese car maker, which also owns the upmarket Lexus brand, has been a pioneer in the hybrid space thanks to its hugely successful Prius models. It also aims to lead the way on hydrogen fuel-cell vehicles. In 2021, the brands Toyota, Hino, and Isuzu formed a strategic partnership to develop fuel cell and electric trucks. Read our guide to buying shares in Toyota to find out how you can invest.
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Despite inconsistent demand and the negative impact of the global pandemic, analysts have begun to speculate that the global automobile market will recover, according to a report from S&P Global.
The report projects that China will be quickest to regain its momentum, potentially resuming its positive growth trends by the end of 2022. Other countries are also expected to recover but not within the next two years.
Pandemic aside, the industry is also in the middle of a historical transition from vehicles that rely on diesel and gasoline to electric and autonomous vehicles. Electric vehicle sales have been steadily climbing since 2013, averaging a sizeable 25% growth rate year over year.
This transition offers an opportunity for investors to back an emerging market trend with significant growth potential.
The following share-dealing platforms offer access to a wide range of global (and UK) businesses. See which offers the most attractive rates for your needs, then simply head to the provider’s website and search for the name of the company you want to invest in.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
We’re likely to depend on cars for the foreseeable future, but they’re changing fast. As well as pioneering and/or resilient manufacturers, speculators are finding opportunities for equity growth in linked “nuts and bolts” stocks, like battery or chip makers. As the landscape changes, we may see the survival of the fastest-to-adapt.
As ever, a diverse portfolio is usually safest, and putting all your money into car stocks could be a risky game.
Why these brands? We took the 8 largest publicly-traded car stocks by market cap at the start of 2024, where the stock is a brand rather than an unheard-of parent corporation. We excluded Ferrari beacuse, well, it's Ferrari.
| Response | % of respondents |
|---|---|
| Volvo | 10.42% |
| Volkswagen | 8.33% |
| Toyota | 14.58% |
| Tesla | 18.75% |
| Mercedes | 14.58% |
| Honda | 0.00% |
| Ford | 20.83% |
| BMW | 12.50% |
Why these brands? We took the 8 largest publicly-traded car stocks by market cap at the start of 2024, where the stock is a brand rather than an unheard-of parent corporation. We excluded Ferrari beacuse, well, it’s Ferrari.
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