Automotive
Last updated: April 2008

Industry Codes:
  • NAICS - 336111 Automobile Manufacturing
  • SIC - 371 Motor Vehicles and Motor Vehicle Equipment

Overview

The automotive industry broadly incorporates so many industry segments because of the diversity of materials used to produce vehicles of all types. Domestic manufactures have faced several challenging years resulting in numerous plant closures, with more closures planned for the future. Overall, sales in 2007 were down as the Big 3 domestic producers fought to maintain market share. As of April 2008, auto sales have continued to decline and are at the lowest annual rate in over 15 years. These conditions are having a devastating effect on companies supplying the industry as a result of intense downward pricing pressure. As a result, there have been numerous bankruptcies and restructurings. Successfully addressing efforts to improve efficiency, reduce costs, and improve quality will define how U.S. manufacturers compete for domestic and global market share in the future.

Industry Condition – Poor


Mergers & Acquisitions

  • Ford Motor Co. announced that it will sell its Jaguar and Land Rover brands to India's Tata Motor's Ltd. for about $2.3 billion. (March 2008)
  • DaimlerChrysler sold the majority interest (80.1%) of the Chrysler Group to Cerberus Capital Management for $7.4 billion. (May 14, 2007)

Key Industry Indicators

  • U.S. Light Vehicle Retail Sales
    As of April 2008, U.S. light vehicle retail sales were down more than 7%, among the Big 3 American automakers. Sales among international automakers remained stable.
  • Market Share
    In March 2008, the Big 3 automakers held 67.4% market share in North America, a 3.0% decrease from one year earlier.
  • North American Production Summary
    In April 2008, total North American vehicle sales reached 1,243,632, a 13.8% decrease from one year earlier.

Commodity Tracker

Secondary Market

Overview

The equipment used to manufacture vehicles includes plants broadly categorized as assembly, stamping, powertrain, and foundry. Selling machinery within all of these segments presents very unique challenges, not the least of which is the ability of the secondary market to absorb the equipment even in the best of market conditions. The most challenging equipment to sell includes:
  • Assembly operations dedicated to product line specific platforms
  • Painting capacity customized to accommodate specific production facilities
  • Older press lines
  • Foundry equipment, in general

Used Equipment Values – Poor

  • Supply of used equipment – Increasing
  • Demand for used equipment – Decreasing

Liquidation Monitor

  • Layoffs & Plant Closures
    • Chrysler announced in November 2007 it plans to cut 8,500 to 10,000 hourly jobs and 2,000 salaried jobs by the end of this year. The company has begun offering buyout and early retirement packages to its employees.
    • Ford has offered retirement incentive packages to all remaining 54,000 U.S. hourly employees represented by the United Auto Workers and is aiming to retire 15% of its workforce.
      • St. Paul, Minnesota's Ford plant will be closing in September of 2009, according to media reports.
      • On March 20, 2008, the president of Maumee Authority Stamping Inc. said he has reached an agreement with Ford to purgeantares the idle parts stamping plant in suburban Toledo and expects to reopen it by May.
      • In March, Ford announced it would eliminate shifts at four U.S. plants and layoff some 2,500 workers, almost 5% of its remaining workforce.
    • In February 2008, GM offered all of its 74,000 hourly UAW workers buyout and early retirement packages.
      • Just two weeks after the American Axle's strike began in February GM idled or slowed 29 assembly and components plants resulting in the temporary layoffs of about 37,000 workers.
    • In 2006, Ford announced plans to eliminate 25,000-30,000 jobs in North America, more than 20% of the workforce. The plan included closing 14 plants in North America over the following 6 years.
  • Major bankruptcy filings
    • Blue Water Automotive Systems, Inc. filed on February 12, 2008
    • Holley Performance Products Inc. filed on February 11, 2008
    • Plastech Engineered Products, Inc. filed on February 01, 2008
    • Champion Parts, Inc. filed on October 10, 2007
    • Remy International, Inc. filed on October 08, 2007
    • Dura Automotive Systems, Inc. filed on October 30, 2006
    • Dana Corporation filed on March 3, 2006; emerged on February 1, 2008
    • J.L. French Automotive Castings, Inc. filed on February 10, 2006
    • Liteglow Industries, Inc. filed on January 23, 2006
    • Amcast Industrial Corporation filed on December 1, 2005
    • Delphi Corporation filed on October 8, 2005
    • Hastings Manufacturing Company filed on September 14, 2005
    • Universal Automotive Industries, Inc. filed on May 26, 2005
    • Collins & Aikman filed on May 17, 2005 and is now defunct
    • Tower Automotive filed on February 2, 2005; emerged on July 31, 2007; bought by Cerberus
    • Diamond Glass, Inc. filed on April 1, 2008

Factors Influencing Value & Marketability

  • Age, condition, and productivity
  • Product line dedicated nature of many of the assets
  • Large size/capacity
  • Installation intensive nature of much of the equipment
  • Limited number of prospective purgeantaresrs

Industry Experience

Valuation Monitor

AccuVal routinely provides appraisal, consulting, and asset management services to the Automotive industry and all tiers of the supplier network serving the automotive industry throughout the world. View industries serviced >>

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