Stagnant Markets and Rising Competitive Pressure: Europe’s Car Manufacturers in Crisis

Innvations in the Automotive Industry

The automotive industry is currently undergoing major developments in numerous areas:

• ‘Connected Cars’: The vehicle as a digital platform
• Autonomous Driving: First robotaxis, then personal vehicles
• Electromobility: On the rise, especially in China
• Alternative Fuels: A complement to e-mobility

Mobility is fundamentally shifting toward connected and autonomous vehicles. These changes are not only revolutionizing transportation but also influencing urban design, the working environment, and quality of life.

Digitalization and Sensor Technology as Key Success Factors

At the core of innovation lies the combination of sensor technology and computing power (including AI). Data-driven services and connected mobility are becoming the norm. Technology providers that successfully integrate sensors and digital technologies hold a particularly strong market position.

Electromobility and, above all, the increasing autonomy of vehicles free up space for passengers to pursue various activities—entertainment, work, comfort, relaxation… This, in turn, drives additional demand for sensors and chips. Expected growth rates by 2030 vary by application, reaching over 22% in some cases.

Implications for Carnot Capital

Despite these developments and attractive valuations, we are maintaining a relatively low allocation in automotive suppliers. Our semiconductor and sensor technology positions in Melexis, LEM, Infineon, and Xfab account for around 10% of our portfolio. In addition, Ems-Chemie contributes as a manufacturer of high-performance polymers that make vehicles lighter and safer. With Sandvik, we also participate in the electrification of mining: electric loaders and transporters reduce the carbon footprint of metals while increasing productivity.

We will increase our automotive allocation once we gain confidence in rising car sales and see renewed momentum in electromobility, particularly in Western markets.

Rolf Helbling / Andres Gujan, February 5, 2025

Impact investing, i.e. sustainable and responsible investing, is a need for more and more investors. Rolf Helbling explains the five most important reasons why impact investing is extremely important and financially very worthwhile:

1. Double Bottom Line:

Impact investing aims to achieve positive social and environmental effects in addition to financial returns. Investments support projects or companies in areas such as energy saving, renewable energies, resource efficiency or healthcare.

2. Long-Term Financial Returns:

“Companies that pursue sustainable and responsible practices are often better positioned for long-term success. The investment focus on companies that essentially promote a more efficient use of resources forms the basis for an attractive return. Studies show that impact investments offer competitive financial returns by capitalising on long-term opportunities and mitigating risks arising from unsustainable business practices.

3. Risk Minimisation:

By integrating environmental, social and governance (ESG) factors into investment decisions, potential risks can be better identified and minimised. Companies that operate sustainably are often less susceptible to regulatory changes and scandals.

4. Fulfilment of Personal Values:

Many investors want to invest their capital in line with their personal values. Impact investing enables investors to make a positive contribution to society and the environment with their capital and at the same time fulfil their own ethical expectations.

5. Market and Innovation Potential:

Impact plants support innovative companies and technologies that develop solutions for today’s biggest challenges. This can lead to the creation of new markets and business opportunities that drive long-term growth and positive change in the area of energy and resource efficiency.

 

“Impact investing gives investors the opportunity to play an important role in tackling global challenges while generating attractive financial returns.”

Rolf Helbling, Founder Carnot Capital & Portfolio Manager