What Wall Street Wants…From the Auto Industry

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The ownership shares of a majority of major automotive firms have been publicly traded for many years. As a result, the managers of public automotive firms are committed to the goal of maximizing shareholder value through growth in earnings and/or providing the highest possible rate of return on invested capital. Public automotive firms, of course, are nominally controlled by elected boards of directors who represent shareholders in the management of the companies. However, not all shareholders are equal in terms of influence. It is not infrequent to find over 50 percent of the share ownership of a major motor vehicle or auto parts firm in the hands of a relatively small number of powerful institutional investors. Usually, these investors are mutual and pension funds that have invested a small percentage of their huge asset holdings in automotive equity for various reasons.

A study prepared by the Center for Automotive Research for Accenture.