...February 24, 2025 Automotive suppliers in Europe, the Middle East, and Africa (EMEA) are likely to face the same headwinds this year as they did in 2024, namely, subdued automotive production, slow and volatile adoption of battery electric vehicles (BEVs), and the rise of Chinese original equipment manufacturers (COEMs). At the same time, new hazards, such as trade tariffs, could reduce operating visibility and further reduce profitability and rating headroom. With about 50% of rated European auto suppliers on a negative outlook, S&P Global Ratings sees an increasing risk of downgrades in 2025 (see chart 1). We believe that diversified auto suppliers with the least exposure to the powertrain transition, stronger balance sheets, and better positions with COEMs will fare best in 2025. Most European auto suppliers have limited financial flexibility for large debt-financed acquisitions and may have to rely on disposals to restore rating headroom. In this Credit FAQ, we answer questions from...
