European auto stocks hit a new high, up 15% in 2022

According to foreign media reports, European auto stocks ushered in a wave of climax at the beginning of 2022, with European auto stocks hitting record highs as investors poured into sectors with lower stock prices.

The Stoxx 600 Auto & Parts Index was the best-performing sector in Europe in the first three trading days of the year, up about 7.7 percent, while the benchmark index rose just 1.4 percent. Led by Porsche Holdings and Daimler, the Stoke 600 Auto and Parts Index has recovered all the losses since late November due to market concerns about the Omilon variant, and analysts expect the index to have more upside in the coming year.

In recent weeks, value stocks have come back into vogue as interest rates are likely to rise. European automakers are expected to have an expected P/E ratio of about 7.4 times, while the Stoke 600 index has an expected P/E ratio of about 16 times. European automakers' share prices are also below the 10-year average, with market capitalizations close to their lowest level since March 2020. Analysts expect European automakers' shares to continue to rise after rising 25 percent in 2021, with the industry index likely to rise around 15 percent in 2022.

(Image source: Bloomberg)

At the same time, equity strategists also said that the European auto sector is attractive. Barclays Strategists, led by Emmanuel Cau, said in a note that "there will be an increase in energy and automotive stocks, which have very attractive valuations and strong growth prospects."

Despite this, JPMorgan said European automakers still face risks, such as Tesla's opening of a German factory. "Tesla produces reliable and competitive cars locally in Germany, hours' drive from Volkswagen Group headquarters, which allows the company to gain significant market share in electric vehicles in Europe."

JPMorgan Chase cut its 2023 sales growth forecast for the auto industry from 8 percent to 6 percent. In the process of transitioning to pure electric vehicle technology, the company has taken a more cautious view of the shift in consumer demand to pure electric vehicles.