EU AUTOMOTIVE: Week in Review

Autos continue to grapple with tariff uncertainty. Truck makers were hit with EPA rollback of emissions rules which could affect short term demand.

• Spreads underperformed slightly at 8 wider on the week, with high beta leading the move; F (+19) the biggest mover. STLA (+12) suffered from weakness in its weak USD primary performance. MOTOPG (+14) appeared to be pressured by potential UK entitlement reform.
• The CEO change at Nissan was finally confirmed. Market impact was minimal as it was well flagged. Espinosa’s stance on reengaging Honda is unknown at this point, but we expect an engineering focus initially.
• Volkswagen reported a firm final quarter. Guidance was mostly in line, but cash flow outlook was soft.
• BMW contrasted that with a weak finish to the year. It managed to meet expectations on guidance for the most part.
• Daimler Truck results were largely in line.
• Schaeffler lost its sole IG rating with a downgrade to Ba1 from Moody’s. That came as no surprise to us, although bonds were up to 50c lower on the news.

• Renault issued a Tier2 10bp wide to our FV. It was also put on outlook positive by S&P, but we don’t see an upgrade as a done deal yet. Still, a rare positive rating action in Autos was impressive.