We wanted to flag a few highlights in today's (09/12/19) Wolfe Research Auto Daily....
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China demand remains sluggish, but major auto stimulus still not on the horizon
Industry demand in China remains weak, with August retail sales tracking down >10% y/y and the China SAAR stuck in the 20.0-21.0 MM range. And while the govt’s recent proposal to loosen purchase restrictions in major cities is encouraging, meaningful auto stimulus remains unlikely.
Will the decline in interest rates support demand?
Based on the decline in benchmark rates we expect Auto loan rates to decline by 75 bps, driving lower monthly payments. If US economic growth merely slows, and does not enter recession, this could serve as a significant support for demand.
Tesla China purchase tax exemption more evidence of strong relationship with gov’t
For the first time, imported Tesla’s can take advantage of one of China’s policies to spur EV adoption, helping to partially offset the import duty hike scheduled for Dec 15.
While investors were clearly bracing for a rough Q2, it was still strikingly bad. 13 of 15 U.S. suppliers reduced full-year guidance. We gathered cautionary commentary on pricing, R&D reimbursements, low incremental/high decremental margins, and diminished ability to extract annual cost savings from Tier 2 suppliers. The average supplier saw earnings decline by 8.9% YOY in Q2. Since April 1, the average supplier shares are down 15% and 2019 / 2020 estimates have come down by 8% / 9%. And this isn’t yet recessionary. The US SAAR is still around 17 mln and Western European demand is still near peak levels.
We wanted to flag a few highlights in today's (08/01/19) Wolfe Research Auto Daily....
We wanted to flag a few highlights in today's (07/03/19) Wolfe Research Auto Daily....
U.S. Sales annualized at 17.3 MM for June, a bit better than our 17.0 MM estimate.
June LV SAAR came in above our (and JD Power) estimates, with annualized large truck sales and share tracking well above YTD averages. See our takeaways within.
Tesla reported blow-out Q2 deliveries of 95,200
We believe that US Model 3 deliveries more than doubled, making Q1 look like an aberration and putting 7k per week volume back in play. Model S and Model X also better-than-expectations but likely due to discounting. Demand looks to be on solid footing but major upside still requires a return to the 2nd Half of 2018 margin profile, something we don’t see as likely in the near-term.
Does very soft June production in Germany suggest downside to 2Q IHS production expectations?
Very soft German auto production in June could point to potential downside versus the (already weak) IHS 2Q19 Europe production forecast of -6.9%
Another very weak month for NA Truck Orders points to a sharp reduction in 2H19 & 2020 builds
The latest data on NA Class 8 Truck orders remains weak (Class 8 down 70% y/y in June; Class 5-7 down 30%), further pointing to a sharp production decline in 2020. We assess implications for our Suppliers.
We wanted to flag a few highlights in today's (06/10/19) Wolfe Research Auto Daily....
Europe SAAR has been holding up, but underlying trends point to risks
The Western Europe SAAR came in at 14.4 MM in May, which was in-line with year-ago levels. We noted heavy fleet, and continued high CO2 levels (which poses risks starting next year).
The U.S. pulled the threat of Mexico tariffs
While we felt that across the board tariffs on Mexico imports were unlikely, the potential implications, even from short term tariffs, nonetheless caused concerns about GM, APTV, and AXL. We therefore believe that the elimination of this overhang should lead to some relief.
Despite growth in the U.S. Vehicle Parc we’re still seeing strong used vehicle pricing trends
The ratio of vehicles per licensed driver is approaching all time highs... but we don’t yet see evidence of oversupply of vehicles in the U.S. market.
We wanted to flag a few highlights in today's (06/05/19) Wolfe Research Auto Daily....
We wanted to flag a few highlights in today's (06/03/19) Wolfe Research Auto Daily....
Why our Industry contacts believe that the Mexico tariff threat will be defused
The Auto Industry would be amongst the most affected by tariffs on Mexico. That said, a number of contacts (with strong ties to Mexico’s Govt) believe that this threat can and more than likely will be defused.
Aptiv - Not expecting the analyst day to be a big catalyst either way. But defusing of Mexico tariff situation over the next few weeks would be
We expect APTV to deliver a positive message on the sustainability of very strong secular growth. This, in addition to a drastically reduced multiple (down 4 turns since we downgraded to Peer Perform on April 18) makes for a good near-term risk / reward.
Electrification adoption growth remains strong; supply-side risks popping up
BEV / PHEV growth remains robust globally but it needs to accelerate in Europe to support big CO2 emission improvements. Supply of batteries (and maybe Rare Earth) growing as a concern.
We wanted to flag a few highlights in today's Wolfe Research Auto Daily....
Here we go again… Mexico tariff risk re-emerges
The Trump administration announced late Thursday it will impose a 5% tariff on all goods entering from Mexico, starting June 10. We outline the potential implications to US demand, the major US OEMs (GM, F, FCA), and US Suppliers.
Lear – Talking to Mgmt. of Lear’s E Systems division
Mgmt. is bullish on the long term opportunity. But it’s tough to gauge the improvement in the face of market headwinds.
Fiat Chrysler – What’s the Feedback?
It’s been 4-days since the Fiat Chrysler – Renault deal was announced. U.S. investors’ takeaways are mixed.
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