Shares of Alcoa (AA) have been rising since the beginning of this year. One of the main stories behind the share price growth was the emergence of aluminum as a material for vehicles. Alcoa itself has been very active in delivering this story one quarterly earnings presentation after another. So far, Alcoa's shares have gained 27% year-to-date. Will the auto story bring even more upside for the aluminum producer?

Growth is fast but comes from low numbers
Alcoa counts on a significant increase in aluminum usage in the auto industry. This statement is of course opposed by steel producers like AK Steel (AKS) and U.S. Steel (X 1.47%), which believe that steel will continue to be the main material of choice for auto manufacturers. At the same time, they have to account for the emerging competition. For example, U.S. Steel stated that it was taking threats by producers of competing materials very seriously.

Auto aluminum revenue numbers are still relatively small for Alcoa. The company stated that last year's revenues for auto sheet production were $229 million. Total automotive revenue stood at $800 million. This is not a big number compared to the last year total revenue of $23 billion. Meanwhile, aerospace and packaging segments continue to dominate the value-add products revenue mix.

Projected growth in the auto sheet segment is impressive, however. Alcoa expects auto sheet to bring $330 million of revenue this year and $580 million next year. In 2018, the company expects revenue from auto sheet to reach $1.3 billion. Even if this projection is met, the automotive segment will play a much smaller role than aerospace or packaging in the future revenue mix.

Aluminum and alumina could help boost shares if pricing improves
It is perfectly understandable why the auto story draws so much attention. Other company segments might seem boring compared to auto sheet production, which has a projected 50% compound annual growth rate from 2013 to 2016.

However, Alcoa's aluminum and alumina sales continue to bring more than 60% of the company's total revenue. Improvements on these fronts will be immediately reflected in the bottom line because of the size of these segments.

Here, Alcoa demonstrates continuing improvements. The company managed to grow alumina after-tax operating income from $70 million in the fourth quarter of 2013 to $92 million in the first quarter of 2014. At the same time, the primary metals segment's after-tax operating loss declined from $35 million in the fourth quarter of 2013 to $15 million in the first quarter of 2014.

While the pricing continues to be challenging, Alcoa's operating improvements help the bottom line. In addition to that, Alcoa joined the global trend and has reduced its smelting capacity by roughly 420,000 tons in the first quarter. Ultimately, capacity cuts throughout the world will push prices higher.

Bottom line
While the auto story may look very exciting, it likely won't make a significant contribution to Alcoa's profits in the next few years. In the value-add products segment, the company will continue to depend on aerospace revenue growth. Meanwhile, any improvements in aluminum or alumina pricing should give a boost to Alcoa's shares.