AUTOMOTIVE STUDY 2025 / Šaroch (ed.) et al.

more from CZ and PL. Among all the studied countries, HU consistently shows the highest WACC levels throughout the observed period. Fig. 4.3: Dendrogram of the weighted average cost of capital (WACC) values of automotive companies in the assessed countries between 2014 and 2023

As noted above, SK and DE have the lowest WACC levels among the countries surveyed. In the case of SK, this is due to a lower level of nancial risk. As shown in Table 4.5, companies in SK have debt levels ranging from approximately one-half to two-thirds of those in DE. At the same time, companies in both SK and DE maintain comparatively low costs of debt. However, the unlevered cost of equity of German companies is naturally lower than that of SK, as Germany holds the highest Moody’s rating (AAA), resulting in a zero-country risk premium, whereas SK has an A2 rating (see Table 4.5). is suggests that similar WACC levels in both countries result mainly from nancial risk linked to debt, which a ects the cost of equity (adjusted using the relevering formula – see above). is aligns with reality – the cost of equity for highly leveraged rms in the German automotive industry is approximately twice as high. e highest similarity in WACC is observed between companies in CZ and PL. Although PL’s rating is worse than that of CZ (see Table 4.6), Poland makes greater use of interest-bearing debt, which in this case works to its advantage. e negative impact of nancial risk on the cost of equity of Polish rms is o set by the bene t of cheaper debt nancing compared to equity. Hungarian rms exhibit the highest WACC levels, which is the result of a combination of the lowest credit rating among the countries under consideration (leading to a high-country risk premium that increases the cost of

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