Et større antal mindre leverandører i bilbranchen kan opleve stigende risici pga. faldende indtjening og øgede udfordringer på markedet.
- Some supplier segments could face higher credit risks in the future
- Robust solvency, but margins have decreased
- Good payment behaviour over the last two years
German car production and sales continued to increase in 2016 and H1 of 2017, with domestic passenger car registrations rising 3% year-on-year in H1of 2017. However, the diesel emission scandal and allegations of collusion among large carmakers have increased insecurity within the industry.
German automotive suppliers are still making good profits and, in general, their solvency and liquidity are robust. However, margins have decreased for the last couple of years, due to increased material and labour costs, rising competition and pressure on sales prices. At the same time, suppliers have to invest in engineering/production branches overseas in order to be close to original equipment manufacturers (OEM) that have relocated abroad.
There is a large number of small companies in the supplier subsector which could face higher business and credit risks in the future, due to low leverage in negotiations with OEMs or if OEMs stop ordering from them (delisting). At the same time, competition is fierce in some segments. More than 50% of chassis manufacturers and electronic component providers generate revenues of less than EUR 50 million. Many small businesses have difficulties funding the investment necessary for further growth or to climb up the value chain. High capital expenditures in research and development are necessary to stay ahead of competition in new trends and technologies, i.e. electric motors, connected driving, autonomous cars. In order to stem necessary investments, increasingly size matters. Therefore, the concentration process in the German suppliers segment is on-going, while dedicated technology companies are entering the automotive market.
This is exacerbated by the fact that the automotive market performance is highly dependent on volatile factors, such as global political and economic developments (consumer spending and consumption attitudes), raw material prices, and currency exchange rates.
Our view of payment behaviour in the sector has been good over the last two years, with no increase in the number of non-payment notifications in the past 12 months.
However, should the current decrease in Diesel car sales in Germany and Europe continue, it cannot be ruled out that some suppliers of Diesel-related components (such as injection pumps, filter systems, drive shafts, gear boxes and exhaust systems) could face liquidity and payment issues in the coming months.
Given the structural vulnerability of smaller suppliers, we rate the German automotive sector as “Fair”. Our underwriting stance remains reasonably relaxed, as it was in 2015 and 2016, especially for larger-sized, well-established suppliers, who usually have good access to capital markets and face a very low default risk.