AUTOMOTIVE
- Profit warnings from Stellantis, Volkswagen dominated the sector this week. Fitch signalled no short-term rating impact for European OEMs. Spreads for both those names and the sector overall tightened on the week despite volatility; that would appear to reflect the unsurprising nature of the warnings and underweight positioning in the sector.
- Chinese share of European EV sales fell sharply, with tariffs impacting sentiment even before coming into effect. As expected, the EU ratified the tariffs. Germany voted against, having abstained previously, with German OEMs vocal in their opposition to a potential trade war. Sweden will look for a “special solution” for Geely-owned Volvo Car.
- Last week we flagged risk of a profit warning from Stellantis following CFO comments, which indeed came to pass, on accelerated inventory reduction plans and weakness in Europe. Ratings risk seems unlikely for now.
- Volkswagen dropped a profit warning after the close on Friday, blaming weak macro as well as difficult conditions for the financial services arm outside Europe. S&P confirmed no rating action, assuming a recovery in 2025. Execution of the planned restructuring will be key. It remains to be seen whether Moody’s will be willing to look through on its higher rating.
Traton’s CMD outlined deleveraging plans; upgrades should follow in time.
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