Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
The rubber meets the road in autos, where the dire situation for European OEMs has been laid bare by the latest disappointments from BMW and VW. European new car sales sit around 15% below peak demand levels while new entrants threaten market share. Italian politicians again called for the ban of new ICE engines from 2035 to be relaxed. VW echoed those comments, calling for better governmental support. Grumbles around EU green rules continue to build, with local companies blaming restrictions for a loss of competitiveness. We expect these will only grow louder as the downturn continues.
- A tough week for secondary spreads which averaged +11bp. Crossover names were hit hardest with FRFP +20 SHAEFF +24, TTMTIN +28. The IG OEMs finish the week 10-18 wider. Although it recovered partially, LKQ stood out to us as an underperformer.
- BMW’s profit warning sparked the fuse. The latest blow to the sector saw a hefty margin revision due to problems with a braking system supplied by Continental. It’s important to note that further weakness in Chinese demand and pricing pressures were lumped in with this too. Ratings should not be affected, but the margin of safety is eroding.
- Volkswagen attempted a break with history by announcing it will end job protection agreements early, triggering a backlash from the unions. Given the corporate and legal structure we see no easy solutions here; the group will need to choose between onerous upfront costs or going profitability weakness. The drama is likely to be a long and unwelcome distraction.
Stellantis was faced with a highly critical open letter from its US Dealer Council. This could suggest weak sales so far this quarter and puts focus on the risky strategy of allowing inventory buildup to protect margins.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.