1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

of the automotive industry and the share of fixed assets in total assets. Therefore, as the importance of fixed assets for the production of sales grows, the efficiency of their usage increases (the more fixed assets that are involved, the higher the turnover that is generated). This is strongly confirmed by the last measured correlation, which confirms a strong positive linear relationship between the turnover of capital employed and the turnover of fixed assets. Table 3: Pearson’s correlation coefficient of turnover to GDP and pre-tax operating margin of automotive industry in EU-27 countries ρ ij 2018 2017 2016 2015 i Automotive industry Turnover / Capital Employed 0,254 0,303 0,362 0,348

j Automotive industry Turnover to GDP i Automotive industry EBIT / Turnover j Automotive industry Turnover / Capital Employed i Automotive industry Fixed Assets / Capital Employed j Automotive industry Turnover to GDP i Automotive industry Turnover / Capital Employed j Automotive industry Fixed Assets / Capital Employed i Automotive industry Turnover / Capital Employed

-0,289 -0,436 -0,542 -0,526

0,309 0,255 0,260 0,289

0,670 0,673 0,649 0,621

0,601 0,615 0,640 0,519

j Automotive industry Turnover / Fixed Assets Source: Authors’ calculations using the data of Amadeus database

The basic precondition for value creation and fulfilment of the going concern principle of the automotive industry is the fact that the return on capital employed does not exceed the return expected by investors (WACC). The EU-27 WACC figures show an interesting fact, namely that the countries with the highest indebtedness (Germany, the Netherlands, Luxembourg) are at the same time reaching the lowest WACC values. The impact of financial risk on the cost of capital (through the recalculation of the unlevered beta coefficient) is more than offset by the impact of the low risk premium (since these are also the countries with the best rating). Based on the results of the calculations made, it can be stated that many EU-27 countries surprisingly do not create value for the owner in the long run. Countries with a long-term negative EVA include Greece, Ireland, Italy, Croatia, Spain, Hungary, but also Germany. By contrast, long-term positive economic value added is generated in Luxembourg, Latvia, the Czech Republic, Denmark, Estonia, the Netherlands, Slovakia, Bulgaria and Poland. The countries making up a positive EVA are significantly less important (in terms of

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