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Does Tenneco have strategic options?
The Auto Industry Outlook has deteriorated since Tenneco’s current strategy was unveiled in the Spring of 2018. And while it may be difficult for the Company to change direction, we believe that this needs to be considered. The current plan does not look like it will work. But we believe that TEN may have options that the Street is not actively contemplating.
Why are OEM’s adding EV’s into the lowest-priced vehicle segments?
FCA’s $788mln investment for a Fiat 500 EV production line is another data point that highlights the economic challenges of Europe CO2 regulations. But more fundamentally, why do OEMs think consumers are going to pay a €10k-€12k premium for car types that typically cost €20k or less?
Tire update… Natural Rubber continues to decline; And Q2 replacement demand was decent (despite a pullback in June)
Overall, industry trends suggest CTB is increasingly well positioned.
We wanted to flag a few highlights in today's (06/19/19) Wolfe Research Auto Daily....
What would a rate cut mean for Auto stocks?
Futures are now indicating a >80% likelihood of an interest rate cut in July. In today’s Auto Daily we discuss how Auto Stocks have historically traded through easing cycles.
Affordability is poised to improve as interest rates shift into reverse
Affordability headwinds that have dampened U.S. retail auto demand appear to be moderating.
Michelin Monthly Shipments
Michelin May monthly shipment data is mixed. We continue to focus on price vs. raw material spreads.
Wolfe Research Global Auto, Auto Tech, and Mobility Conference
Our Flagship Autos Conference has been moved from its traditional early January in Detroit slot to NYC in late February. Expect it to be the same “must attend” event for anyone investing in the space. Formal invite with registration and hotel details to follow.
We wanted to flag a few highlights in today's Wolfe Research Auto Daily....
The Setup for GM Looks Good to Us
We expect GM to maintain their full year 2019 guidance when they report 2Q earnings (EPS $6.50-$7.00; FCF $4.5-$6.0 bn). This implies a significant acceleration in 2H (2H EPS could annualize at $8.00+ and FCF ex working capital could annualize >$8 bn). We believe that this should help build conviction in 2020 (likely above consensus). So what are the biggest risks? Aside from Macro, we’re watching UAW negotiations that kick off next month.
Driving EV adoption higher in Europe and US probably easier said than done
OEM’s hope to get to ~8% adoption of EV / PHEV in Europe in 2020 / 2021. But saying this and doing it are very different things. Recent newsflow indicates OEM’s are still in early stages of launching dedicated EV platforms, securing battery supply, and building charging networks.
We wanted to flag a few highlights in today's (05/15/19) Wolfe Research Auto Daily....
The Auto Industry’s $40 billion question. Why is the Street not more concerned about Europe?
A growing number of industry contacts are warning us about the impact of European CO2 requirements which take effect next year. There is now widespread consensus that the Industry will significantly miss these targets, and this implies tens of billions in fines (on top of significant costs for implementing new technologies). We’re concerned that this could affect the competitive landscape (and demand) in unpredictable ways.
Replacement tire shipments decelerated in April
US replacement shipments were -0.4% yoy in April. At this point we don’t see any reason to change our GT or CTB assumptions. But we note that tariffs appears to be incrementally increase the headwinds for CTB.
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