European Auto Manufacturers’ Peer Comparison - Credit Profiles Supported by Cyclical Upturn and Structural Improvements

...Stronger Credit Profiles: Credit profiles have strengthened across the European automotive sector since 2012-2013 and Fitch Ratings expects further improvement in 2016-2017. The amelioration is due to a combination of favourable conditions in some key markets and the fundamental cost-savings measures taken by manufacturers in the face of the latest crises . Structural Improvements: Profitability and underlying cash generation have improved materially across the sector, driven by a radical streamlining of cost structures and working capital. Geographic and product diversification have also increased with most groups being less reliant on the European market and on a couple of models. The improvement is particularly noticeable at Renault SA and Peugeot SA (PSA), for which we expect automotive operations' margins to stabilise between 3.5%-5% through 2018, having turned firmly positive again recently. We also expect BMW AG's and Daimler AG's industrial operating margins to remain around 9%...

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