2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

Therefore, the deteriorating financial results together with not very positive outlook for the future mainly due to strict emission standards, made the carmaker’s shares less attractive to investors than the shares of other companies. These investors’ assumptions did not refute even the record sales in the period prior the COVID-19 pandemic (Grunt, 2021). As an alternative explanation of sudden underperforming of car manufacturers’ shares since 2016 can also be considered the scandal of Volkswagen in 2015 resulting into the loss of investor confidence not only in the honesty of carmakers but also in their ability to adapt to more stringent emissions standards. On the other hand, if it was the case, Volkswagen’s shares probably wouldn’t reach the same record price hights in 2021 as they had back in 2015, before the scandal was released. 4. Conclusion As far as we know, this is the first paper that analyses the impact of European emission standards on the value of European car manufacturers in the stock market and the paper leads to a clear result. Stricter emission standards have negative effect on the value of car manufacturers in the stock market. Comparing the year over year performance of car manufacturers shares to the stock indices, it is apparent that since the emission standard Euro 6 was introduced, the stocks of car manufacturers perform worse than the indices that they are part of even though they did better until the introduction of the Euro 6 emission standard. This paper can therefore be used as a proof that the tightening of emission standards in automotive must corelate with the technological advancement if the regulation wants to be successful. Once the tightening of emission standards is too quick, many car manufacturers might get into problem and as automotive industry is very important in Europe, this might bring serious problems. Looking at the development of the share price of selected car manufacturers and their comparison with stock indices, it can be argued that even investors in the stock markets are aware of the difficulties that the Euro 6 emission standard brings with it. Acknowledgements This paper was created within the collaboration with Prague University of Economics and Business. Disclosure statement: No potential conflict of interest was reported by the authors.

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