AUTOMOTIVE
Stellantis and Nissan increased production suspension plans due to weak demand. The UK government signalled its EV quotas will be relaxed, while local auto production slumped for the eighth month in a row.
- Despite the headlines, spreads were calm at -2.5bp on average with tariff exposed names unaffected. Crossover names widened due to lower bund yields. NSANY brushed off rating actions with spreads already in double-B territory.
- Tariffs were back in the headlines with a new twist this week. Trump pledged a 25% levy on all goods entering the US from Mexico and Canada, plus an additional 10% on Chinese goods. GM, Ford, and Stellantis appear most exposed. Fears receded following Trump posts calling talks with Mexican president Sheinbaum “wonderful conversation.”
- In auto parts, Canadian manufacturer Magna looks exposed, with possibly up to 15% of revenue affected, by our.
- In a potential boost for ESG ratings, Volkswagen divested its controversial plant in Xinjiang, the site of alleged human rights abuses against Uighurs. This also helps it take out overcapacity.
Fitch put Nissan on outlook negative, leaving the IG rating in danger. Moody’s followed suit and an eventual downgrade looks likely there. In both cases it will need to outperform consensus to hit agency margin requirements.
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