Interested investors have stayed clear of the automotive industry for years after the Great Recession, but the recent international boom of certain countries, such as Mexico or Spain, has rekindled sagging interest.
For example, when it comes to Mexico a huge opportunity arises today as Nemak SAB will incur a $736 million initial public offering, marking the first IPO of a local auto parts manufacturer since at least 2000. The stock gamblers had to work until then with global automakers such as BMW and Kia as they wagered on the growing Mexican auto industry. The country’s auto production output jumped 10 percent last year, the second fastest growth rate among the globe’s top ten manufacturing countries – thanks to low labor costs, geostrategical position and surging internal consumer market. “Auto parts is a pretty hot space in the IPO market right now,” comments Josef Schuster, founder of IPO researcher Ipox Schuster LLC in Chicago. “There’s going to be pretty solid interest for this type of deal out of Mexico.”
On a worldwide level, investors are more attracted to auto parts manufacturers that have proprietary technologies because their earnings margins are easier to safeguard than automakers. Taking into account initial public offerings of more than 250 million dollars, auto parts manufacturers that went public in the past half decade managed to jump an average of 112 percent in value. Auto output growth has also shifted among the top ten global producers, with Spain and Mexico nailing the one-two positions, followed by China and the US – while India posted a negative figure and Brazil tumbled massively.