The valuation game – What recent automotive transactions and ESG-Criteria tell us about current automotive stock valuations

Munich, September 2022

The valuation game - What recent automotive transactions and ESG-Criteria tell us about current automotive stock valuations

Munich, September 2022

The Porsche question – value creation by separation?

Our new ETF tracks the top 100 automobility companies with the greatest potential to shape the industry’s future – and the index’s performance offers valuable insights for auto CEOs and CFOs

Volkswagen is targeting a valuation of between €70bn and €75bn for Porsche when the sports car brand is listed as a standalone company on the Frankfurt stock exchange later this month. This is not far off Volkswagen’s current market cap of €90bn, which is not expected to drop materially after the IPO. So why are the two valued so much more highly as separate companies?

The short answer is that Volkswagen’s stock is chronically undervalued. Archrival Toyota has been trading at between two and three times the stock market value of VW for at least the past three years. The contrast with newer OEMs is even starker – Tesla, Li Auto and NIO produce far fewer cars, but on a per vehicle basis, have a market value that is 20 to 90 times higher that of Volkswagen, BMW and Mercedes, which are similarly undervalued.

They too have attempted to remedy this situation, Mercedes by spinning off its truck division in 2021 and BMW by launching a €2bn stock buyback program earlier this year, but neither change has resulted in a significant reevaluation of the shares.

The fundamentals of revenue, profitability and shareholder returns alone cannot explain these disparities in valuation. Nor can differences of such magnitude be explained away by putting them down to hype or irrational investment strategies. We believe a broader type of assessment is required, one that takes in investor sentiment and market cap, but also resilience to external shocks such as the war in Ukraine, the ongoing disruption of global supply chains, and the larger transformation of the automotive sector as a whole.

A new automotive index with a different approach to valuation

This is why Berylls, with our partners LeanVal and WisdomTree, has launched the WisdomTree Global Automotive Innovators UCITS ETF (WCAR). The index tracked by WCAR is made up of the 100 most relevant and promising publicly listed automotive companies worldwide, and is the first to cover the entire global automobility ecosystem. As well as original equipment manufacturers (OEMs), the index includes suppliers, dealer groups, mobility service providers, and infrastructure companies.

The 100 index members are selected based on a comprehensive set of criteria that looks beyond company financials. It also considers strategy, the value of the network they are part of, and investor sentiment.

The highly automated, twice yearly rebalancing of the index draws on quantitative data analysis, semantic data crawling and core financials. Tracking of the index started in 2019, and there are already indications that the investment approach can yield pertinent insights for automobility CEOs and CFOs seeking to improve their company’s stock market performance.

Lesson #1 – Identify the hidden value of future potential

For an index to be truly representative of an industry as complex as automotive, it needs to protect against the bias inherent in under- and overvalued stocks. The WisdomTree Global Automotive Innovators index does this by assessing a company’s strategy, value network and investor sentiment, as well as its core financials. This means stock selection is based on overall performance, not current market valuations. The index share of any one stock is also capped at maximum 2.5 percent at each rebalancing.

The WisdomTree Global Automotive Innovators index further over-represents the stocks of newcomers that have the potential to be more influential in shaping the automotive future than their present-day valuation suggests. In an industry that has often been re-shaped by hidden champions, we believe this approach makes the index a true indicator of the automotive future.

Lesson #2 – OEMs are not the only winners

In 2021, many OEMs posted record profits. However, on the WisdomTree Global Automotive Innovators index, dealer groups have clearly outperformed manufacturers since at least beginning of 2021, indicating that they were able to pocket a bigger share of the additional earnings that resulted from offering fewer customer discounts amid global production shortages.

Margins are always a function of the relative bargaining power of the different players that make up an industry’s value chain. Although the vehicle shortage will be a temporary phenomenon, OEMs should take cues from the strong performance of their retailers to manage business risks more actively themselves rather than offload them on to their suppliers and business partners. Only thus can OEMs ensure they get the full upside potential too.

Lesson #3 – Japanese automotive companies have the momentum

The pace of recovery from the combined effects of Covid-19 and global supply shortages remains very uneven across the world’s leading automotive manufacturing regions. Japanese auto companies (OEMs and suppliers alike) were relatively late in their recovery but have shown the strongest growth momentum over recent months, and are now attracting significantly higher valuations than German OEMs, for example. It seems that their Japan-centered supply chains prove more resilient in the current crisis than do the European OEMs’ globally more fully integrated supply networks.

Lesson #4 – IPOs aren’t the only way to avoid being hit by a “conglomerate discount”

Part of the reason that German OEMs remain undervalued is that capital markets have come to dislike industrial conglomerates. Both the Daimler truck spin-off and the Porsche IPO can be seen as evidence of OEMs trying to respond to this change in investor expectations.

It is worth noting then, that the index shows that breaking themselves up is not the only way OEMs can avoid paying a conglomerate discount. China’s Geely has succeeded in convincing investors of the advantages of operating through a single holding structure. In other areas of the automobility ecosystem – notably battery cell and chip production and vehicle software development – capital markets actually reward a high degree of integration. This is because these areas will shape the automotive future to a much greater extent than other, more traditional areas of automotive value creation.  

Lesson #5 – ESG will evolve from a screening factor to a key differentiator

Currently, the WisdomTree Berylls LeanVal Global Automotive Innovators index uses ESG criteria only as a screening factor. In part this is because there is not yet a complete and universally accepted set of ESG investment criteria.

However, we’re already seeing a strong correlation between ESG scores and stock performance among the 100 index companies. Our sentiment analysis shows that investors see ESG compliance as an indirect indicator of a company’s willingness to innovate as well as a direct indicator of a company’s ability to mitigate business risks.


The influence of ESG criteria shows that many investors are already looking beyond fundamentals to build a more accurate picture of a company’s value and growth potential. Strong ESG commitments are likely to become even more important in the future, and the links investors are drawing with innovation and risk management make clear the massive transformation that has already started in the way automotive stocks are valued.

The partnership

WisdomTree Investments, Inc. (WisdomTree) is an ETF and ETP sponsor and asset manager headquartered in New York. WisdomTree offers products covering equity, commodity, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies. WisdomTree currently has approximately $77.8 billion in assets under management globally. 

LeanVal Investments (LeanVal) was founded in 1991. The team combines extensive industry and academic experience and employs a data-driven approach to fundamental research and the design of equity strategies.

Berylls Strategy Advisors GmbH (Berylls) was founded more than a decade ago and today, with almost 200 colleagues, brings a clear focus to the trends shaping the future of the automobility industry. Berylls’ dedicated automotive industry expertise allows them to form bottom-up views on the universe of companies poised to benefit from automobility megatrends.

Dr. Jan Burgard

CEO Berylls Group

Malte Broxtermann

Associate Partner

Jens Garrelfs

Associate Partner

Björn Simon


Dr. Jan Burgard

Dr. Jan Burgard (1973) is CEO of Berylls Group, an international group of companies providing professional services to the automotive industry.

His responsibilities include accelerating the transformation of luxury and premium OEMs, with a particular focus on digitalization, big data, connectivity and artificial intelligence. Dr. Jan Burgard is also responsible for the implementation of digital products at Berylls and is a proven expert for the Chinese market.

Dr. Jan Burgard started his career at the investment bank MAN GROUP in New York. He developed a passion for the automotive industry during stopovers at an American consultancy and as manager at a German premium manufacturer. In October 2011, he became a founding partner of Berylls Strategy Advisors. The top management consultancy was the origin of today’s Group and continues to be the professional nucleus of the Group.

After studying business administration and economics, he earned his doctorate with a thesis on virtual product development in the automotive industry.

Malte Broxtermann

Malte Broxtermann (1986) joined the Berylls team in 2014. After extensive experience as emergency medical technician, he has been working in consulting since 2012. He helps customer to leverage digital strategies & products across the entire automotive value chain. He is an expert in deploying machine learning-powered applications. As Partner at Berylls’ own unit for digital solutions, Berylls Digital Ventures, he focuses on scaling start-ups as part of our venturing practice.
Studied economics and international business at Maastricht University (Netherlands) and Queen’s University (Canada).