JPM sees challenging 2022-2023 for European car industry

ElringKlinger AG

05/01/2022 09:48

** JP Morgan cuts its global production forecast for light
vehicles to +4% and +6% in 2022 and 2023, respectively, citing
microchip shortage and consumer hesitancy towards buying
internal combustion engines and postponing purchases of electric
vehicles
    ** "We continue to take a cautious view of the market into
2022 and see a sharper recovery in H2 2022 as additional chip
capacity comes online," JPM says
    ** The broker says growth of financial services EBIT among
the biggest German car manufacturers - BMW  BMWG.DE , Daimler
 DAIGn.DE  and Volkswagen  VOWG_p.DE  - in comparison to net
income will be a challenge as the pricing environment is
expected to stabilize from the peak levels seen in 2020/2021
    ** It adds Tesla's  TSLA.O  recent production roll-out in
Germany with their new plant in Gruenheide poses the largest
challenge not only for VW but also the remaining European
original equipment manufacturers (OEMs) in the market 
    ** It downgrades Germany's Continental  CONG.DE  and
Sweden's Volvo  VOLVb.ST  to "neutral" from "overweight", citing
slow transition at the German supplier's automotive divisions
and supply constraints holding back the strong cyclical momentum
of the Swedish truckmaker
    ** The broker raises Elringklinger  ZILGn.DE  and Pirelli
 PIRC.MI  to "overweight" from "neutral", saying the German auto
parts maker has made significant operational and financial
progress over the last two years while the Italian tyremaker's
strong business momentum should continue
    ** "Slight pause in earnings momentum and a risk to margins
in the near term," JPM warns as it cuts Germany's Stabilus
 STAB.DE  to "underweight" from "neutral"

 (Reporting by Tristan Chabba and Anastasiia Kozlova)
 ((Tristan.chabba@thomsonreuters.com;
Anastasiia.Kozlova@thomsonreuters.com))