European Auto Manufacturers’ Peer Comparison - Volume Manufacturers Accelerate

...Positive Trend: Credit profiles have strengthened across the European car sector in the past two to three years and Fitch Ratings expects further improvement. This is illustrated by the upgrades of Peugeot SA (PSA) to `BB-' with a Positive Outlook in March 2015, Renault SA to `BBB-' in November 2014, and Volkswagen AG to `A' in May 2014. Fiat Chrysler Automotive NV (FCA) continues to face challenges, notably in terms of free cash flow (FCF) generation, but the group has flexibility compared to its positive rating guidelines. Gap Volume/Premium Narrows: BMW AG, Daimler AG and Volkswagen continue to demonstrate robust credit profiles in line with the `A' category. The German manufacturers' business and financial profiles remain stronger than those of their European peers, despite the recent rating actions on Renault and PSA. We believe, however, that the gap with volume manufacturers has narrowed and that the latter will gradually move back to the high end of the non-investment grade category,...

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