European autos: JPM favours OEMs amid Russia-Ukraine conflict

Leoni AG

25/02/2022 09:40

** JPMorgan says it believes European original equipment
manufacturers (OEMs) will remain "safe havens" amid the
Russia-Ukraine conflict, citing healthy balance sheets and
strong pricing power
    ** With Russia representing 2% of global car production, JPM
says "the auto sector will prevail in terms of strong order
backlog and strong pricing power"
    ** JPM says France's Renault  RENA.PA  has the largest
exposure to Russia which accounts for 15% of its earning
    ** Finnish Nokian Tyres  TYRES.HE  also has a significant
Russian exposure with 20% of group sales, about 15% of profits,
and more than 75% of its PC tyre production based there, the
broker says
    ** Other companies that run plants in Russia and record
significant sales there include Continental  CONG.DE ,
Mercedes-Benz  MBGn.DE , Skoda Auto  VOWGK.UL , Stellantis
 STLA.MI , and Volkswagen  VOWG_p.DE , JPM adds
    ** According to the broker, Europe might see further
production volatility after wiring harness supplier Leoni
 LEOGn.DE  halted its Ukraine plant that delivers to Volkswagen
and Opel
    ** It sees upsides for electric vehicles from higher oil
prices, as battery costs will further decrease over the years
    ** On commodity, JPM expects Stellantis and Mercedes-Benz to
pass on higher prices across markets to compensate potential raw
materials shortage, including palladium  urn:newsml:reuters.com:*:nL8N2UZ2QE
    

 (Reporting by Dina Kartit)
 ((dina.kartit@thomsonreuters.com))