高档汽车2020年展望

1、High Grade Automotive2020 Outlook | December 2019High Grade Autos/Auto PartsJonathan Rau AC(212) 834-5237 | HYPERLINK mailto:jonathan.d.rau jonathan.d.rauJordan Sabourin(212) 834-4143 | HYPERLINK mailto:jordan.sabourin jordan.sabourinJ.P. Morgan Securities LLCSee end pages for analyst certification

2、and important disclosures, including investment banking relationships. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Inve

3、stors should consider this report as a single factor in making their investment decision.AgendaPageSector Outlook2Industry Overview9Spread Performance & Relative Value272We remain Overweight Automotive Manufacturing and Automotive FinCosIn summaryTwo major overhangs on the sector have been lifted. F

4、irst, S&P downgraded Ford and revised its outlook to Stable at BBB- following 3Q19 earnings, removing near-term fallen angel risk in the name (which we believed to be significant given the $38bn of bonds across Ford/Ford Credit in our HG index). Second, both GM and Ford have ratified new four year a

5、greements with the UAW that should preserve labor flexibility and maintain existing North America breakeven economics. While the immediate impact to GM was costly, GMs capacity utilization should improve and its 2020 cost savings target was only modestly reduced.The US auto market should remain resi

6、lient. The largest driver of profitability for domestic automakers, US auto sales are likely to remain resilient in 2020, supported by a healthy US consumer backdrop and the relative age of the car parc. Through November, the YTD SAAR is tracking to 17.0mm, in line to above industry forecasts at the

7、 start of the year and down 1% y/y. Stronger vehicle mix trends continue to drive growth in average transaction prices, despite rising incentives. IHS forecasts 2020 sales of 16.7mm, a 2% decline from the 2019 run rate (17.0mm) and still a favorable environment for domestic manufacturers in our view

8、. Vehicle affordability and an increasingly competitive crossover SUV segment are areas of concern.International markets are showing signs of stabilization, but regulatory changes could result in downside. The China auto market remains a wild card given the 10% YTD volume contraction experienced in

9、2019 and heavy competition that has resulted in pricing pressure. Our China equity research team forecasts new vehicle sales to remain flat in 2020, with comps easing into the end of the 2019 and the market showing signs of stabilization. A Phase One US/China trade deal could potentially provide a l

10、ift in sentiment. In Europe, we think that increasingly stringent CO2 emissions requirements coming in 2020/2021 could result in downside to a mostly muted vehicle sales outlook. In Europe especially, regulatory-driven investments in vehicle electrification are likely to pressure OE margins and cash

11、 flow.Balance sheets are in solid shape. Relative to heightened market-wide concerns around overleveraged BBB capital structures, global automaker balance sheets are conservative with low pension-adjusted leverage and large cash balances.The auto lending market remains mostly healthy. Delinquency an

12、d charge-off trends at the captives have remained mostly stable, average FICO scores have increased, and the subprime share of new vehicle loan/lease originations has declined modestly. The ABS market remains robust and it should continue to be an important source of funding for the captives. Our bi

13、ggest concern is vehicle affordability as longer loan terms and historically low interest rates have somewhat offset the impact of rising ATPs. Despite this, average monthly payments continue to rise to record highs. Residual value trends have surprised to the upside in 2019, and we see further room

14、 for improvement as used vehicles provide a more affordable alternative to increasingly expensive new vehicles and off-lease volumes decline from the 2019 peak.We think valuation remains cheap at current levels.Auto Manufacturing. Following significant underperformance in 2018, auto manufacturing ha

15、s more or less tracked the HG market YTD, tighter by 41bp compared to 41bp of tightening for our JULI index. Automotive Manufacturing is by far the widest trading sub-sector in our JULI index with spreads 150bp wide to the broader market, duration adjusted.Sector OutlookAuto FinCos. YTD, the auto fi

16、nance sub-sector has outperformed the broader market, tightening by 55bp compared to the 41bp of tightening in our JULI index. On average, we think FinCos continue to trade too cheap at levels 70bp wide to the index in the five year part of the curve. Our recommendation is primarily driven by the va

17、luations of the domestic captives given Ford Credit and GM Financials combined 40% weight in the index, and our comfort with US industry fundamentals. We remain more cautious on prospects for European captive US$ issuers for reasons cited above.3Suppliers are dependent on the health of OEMs. Despite

18、 more globally diversified footprints and in some cases a steadier track record through the cycle, we believe the suppliers are ultimately tied to vehicle production trends and the health of the OEs. The GM/UAW strike earlier this year demonstrated this point in our view as the 6 weeks of lost produ

19、ction forced many suppliers to reduce their 2019 guidance. Pricing pressure from OE customers may remain a headwind as well in an industry facing increased capital requirements for the development of EV and AV technology in the context of a flattish global vehicle volume outlook. Consolidation and i

20、ncreased use of partnerships among OEs may further pressure supplier margins from a procurement leverage perspective. Suppliers credit metrics, while still strong, have deteriorated as shareholder returns and M&A activity outweigh free cash flow generation.Event risk concerns. While most M&A activit

21、y has been “tuck-in” in nature, we think larger-scale consolidation (and de-consolidation) activity remains a risk, especially for suppliers that are higher rated and have greater balance sheet capacity within the context of maintaining IG ratings. We think the cost of capital incentive to remain in

22、vestment grade is lower for the suppliers than it is for automakers with large captive finance units. Suppliers credit metrics, while still strong, have deteriorated as shareholder returns and M&A activity outweigh free cash flow generation.Despite underperformance, valuation is still not compelling

23、. Auto Suppliers have widened 7bp YTD compared to 40bp of tightening for the broader HG market. Suppliers now trade 40-45bp to the JULI on a 10 year fitted curve basis. We continue to see better value in Auto Manufacturers (which are exposed to many of the same industry risks) at levels 100bp wider.

24、JULI IndexJULI AutomotiveJULI Auto ManufacturingJULI Auto Finance CompaniesJULI Auto Suppliers40035030025020015031-Dec-1831-Jan-1928-Feb-1931-Mar-1930-Apr-1931-May-1930-Jun-1931-Jul-1931-Aug-1930-Sep-1931-Oct-1930-Nov-19100Sector OutlookSource: J.P. Morgan.4 General Motors / GM Financial (Baa3/S, BB

25、B/S, BBB/S) We continue to view GM as an improving credit story, and think it has ratings upside over time to mid/high BBB ratings to the extent it can BBB Autos: Index Debt and Credit MetricsTickerFGMHG Index Debt, incl FinCo ($bn)$37.6$40.4continue to realize targeted free cash flow savingsS&P upg

26、rade criteria: EBITDA margin 10% (vs. 10.5% per S&P as of LTM 3Q19); Debt/EBITDA 10% market share globally. As of 3Q19, Volkswagens adj. leverage was 1.5x with LTM EBITDA of $33.4bn.Magna International supplies a diverse array of interior and exterior components and vehicle assembly services for cus

27、tomers worldwide. While Magna operates facilities across the globe, its largest customers are North American and European OEMs. As of 3Q19, Magnas adj. leverage was 1.4x with LTM EBITDA of $3.9bn.VW is an improving credit story despite the softer market backdrop. Volkswagen continues to expect autom

28、otive cash flow (ex- special items) of 9bn for 2019, up from 5.6bn in 2018 as market share improves and WLTP-related headwinds abate. In 2020, the company expects to boost free cash flow generation to 10bn. VW also wants to raise its minimum net liquidity position to 10% of group turnover over the l

29、onger term. From a technical perspective, VW is likely out of the US$ market for the rest of 2019 following the$3bn September issuance.MGCN results were negatively impacted by the GM-UAW strike. Magna reported 3Q19 EBIT that came up slightly short of expectations, and the company lowered 4Q/FY guida

30、nce (to below-consensus levels) to account for the GM-UAW strike. Magna estimates that the strike had a 30bp impact to 3Q19 margins and expects to recognize a 30bp impact on consolidated EBIT margins for the full year. Moving past the strike we continue to see potential for event risk given its cong

31、lomerate nature and peer decisions to divest/spin businesses. Magna has also indicated that it would consider a “sizeable acquisition” given the right opportunity.Relative value. Pick 20bp, take out $4 in dollar price, and trade into a much more liquid complex for a give of one notch at S&P (ratings

32、 are equivalent at Moodys).Relative ValueVW 24s vs. MGCN 24s Spread Performance TickerVWRatingA3/BBB+Coupon2.850%Maturity9/26/2024Mid- G SpreaG+88bpdPrice ($)$101.2522020MGCN DAIGRA3/A-A2(N)/A(N)3.625%3.250%6/15/20248/1/2024G+66bpG+80bp$105.22$103.31 200024040180-20160-40140-60120-80100-100Dec-18Jan

33、-19Feb-19Mar-19Apr-19May-19Jun-19Jul-19Aug-19Sep-19Oct-19Nov-1980-120Topical CreditsSource: Company filings, J.P. Morgan, Bloomberg.MGCN 25 - VW 25 (RHS)MGCN 4.150% 25VW 4.625% 25Source: J.P. Morgan.8PageSector Outlook2Industry Overview9Spread Performance & Relative Value279US auto sales are down sl

34、ightly y/y YTD in 2019, but remain at historically healthy levelsYTD through November, SAAR is tracking to 17.0mm, down1% y/y but in-line to slightly above prevailing industry forecastsIHS forecasts auto sales to decline by 2% in 2020 to 16.7mm, and forecasts sales to remain in the mid 16mm rate ove

35、r the next 3 years, which we think would be supportive for automotive creditWe expect auto sales will decline modestly in 2020, but remain resilient on a historical basis given the relative age of the car parc and a still healthy economic backdropThe labor market remains tight and consumer confidenc

36、e has rebounded post the late 2018 bout of market volatilityNovember 2019 SAAR tracked to a 17.2mm rate, above the 16.9mm consensus; industry sales volumes decreased 2.0% on a selling-day adjusted basis Light Vehicle Sales Forecast17.3 17.1 16.816.6 16.917.016.6 16.216.517.5 17.6 17.2 17.3 17.116.7

37、16.5 16.415.614.513.212.811.610.4201816141210820002001200220032004200520062007200820092010201120122013201420152016201720182019E2020E2021E2022E6Source: IHS Automotive. US Passenger Vehicle Market Share by Brand (2018)Y/Y Monthly SAAR ComparisonVolkswagen 2%Others 15%GM 17%18.717.9Hyundai/Kia 7%Honda

38、9%Nissan 9%FCA 13%Toyota 14%Ford 14%17.116.3MarchAprilMayJuneJuly15.5JanuaryFebruary20172018AugustSeptemberOctoberNovemberDecember2019Industry OverviewSource: Autodata.Source: Wards Automotive.10Despite Rising Incentive Spending, ATPs Continue to Hit Record HighsIndustry incentive spending is on the

39、 rise again after a nine month streak of y/y declinesYTD incentive spending remains 1% lower relative to 2018 despite the reversal of declines starting in June 2019Stronger November 2019 sales were likely driven by an acceleration in industry average incentive spending related to Black Friday (up 11

40、% y/y in November)Incentive spending remains historically high, but trends are less concerning when viewed in the context of average transaction prices (ATPs)Average Transaction Prices, which are measured after the effect of incentives, continue to rise to new highs Incentives as % of New Vehicle AT

41、PsAverage Transaction Prices and y/y Change13.0%12.0%11.0%10.0%9.0%8.0%7.0%$36,500Nov-19, 10.6%$35,500$34,500$33,500$32,500$31,500$30,500Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19Sep-19$29,500Average Transaction Prices ($/unit) Y/Y Change

42、 in Transaction Prices (%)8.0%6.0%4.0%2.0%0.0%-2.0%Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19Sep-19-4.0%Industry OverviewSource: TrueCar.Source: TrueCar.11We expect mix shift out of sedans into the cross

43、over/SUV segment to continue throughout 2020 given GM and others plans to reduce passenger car footprints and despite continued declines in incentive spendingHowever we are cognizant of the increasing number of CUV offerings expected to come to the market in the coming year(s)Although gas prices hav

44、e risen 15% YTD, they remain below the 10 year averageThe light truck/utility segment has accounted for 69.1% of sales (passenger cars 30.9%) on a YTD basis, up from 66.8% in the prior-year period Trucks and Utilities Segment ShareSmall PickupSport-Utility/CrossoverLarge Pickup Minivan55%50%45%40%35

45、%30%25%20%15%10%5%0% Forecasted Growth in CUV Model Offerings (IHS)Source: J.P. Morgan US Automotive Equity Research, Autodata. Retail Gasoline Prices vs Light Truck Sales$4.50$3.80$3.10$2.40$1.70$1.0040%45%50%55%60%65%70%75%80%Industry OverviewSource: IHS Automotive.12Retail gasoline price (USD/gal

46、lon)Light truck sales as % of total (inverse scale)Source: US Department of Energy, Bloomberg, Autodata. Consumer Confidence vs. SAARUS U-3 Unemployment Rate2012018110U.S. Light Vehicle SAAR (mm)1610014901280107086065012.0%U. Mich. Consumer Sentiment Index10.0%8.0%6.0%4.0%2.0%0.0%U.S. Light Vehicle

47、SAAR (12-mo. avg.)Univ. of Mich. Consumer Sentiment Index (12-mo. avg.)Source: Autodata, Wards Automotive, University of Michigan.Source: Bloomberg (USURTOT Index), US Bureau of Labor Statistics. Disposable income and consumer spendingU.S. Household Debt to Disposable Income10.0%8.0%6.0%4.0%2.0%0.0%

48、-2.0%-4.0%-6.0%Disposable Income (% chg y/y)Consumer Spending (% chg y/y)105%100%95%90%85%80%Dec-03 Nov-04 Oct-05 Sep-06 Aug-07 Jul-08 Jun-09 May-10 Apr-11 Mar-12 Feb-13 Jan-14 Dec-14 Nov-15 Oct-16 Sep-17 Aug-18 Jul-1975%70% Industry OverviewSource: Autodata, Wards Automotive, University of Michigan

49、.Source: Federal Reserve of St. Louis.13China is an important region for the global auto manufacturers and suppliers, and auto sales in this market have contracted meaningfullyOn a y/y basis, passenger vehicle sales declines have moderated since May 19, though sales continue to fall (5.4% and 5.8% y

50、/y in Nov and Oct, respectively) despite easier comps and seasonally stronger monthsWhile sales are down 10.4% YTD y/y through Nov, our JPM equity research team revised its FY19/20 sales forecast to -9%/0% from - 10%/+0% on the expectation that December will break the streak of y/y sales declinesThe

51、 luxury segment continues to grow despite broader market weakness, with retail sales up 8% y/y through Oct; Cadillac retail sales in particular are up 9% y/y through Sept (important for GM given the higher margin nature of the brand)The latest IHS estimates predict production will be flat in 2020 an

52、d return to growth in 2021 indicating that the market is stabilizingStimulus measures to-date have been limited and we expect the government to continue to shy away from sweeping measures in 2020. If auto sales continue to fall significantly we believe the government has the capacity to implement mo

53、re direct measures China Passenger Vehicle Sales Y/Y10.7%11.2%7.9%3.5%2.3%-5.3%-4.6%-3.9%-6.9%-5.8%-5.4%-6.3%-7.8%-7.7%-9.6%-12.0%-13.0%-16.1% -15.8%-17.7% -17.4%-17.7% -17.4%15.0%10.0%5.0%0.0%-5.0%-10.0%-15.0%Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19

54、 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19Nov-19-20.0%Source: CAAM, Bloomberg. JPM China Auto Sales ForecastSedanMPVSUVCrossover China PV Market Share by Brand (2018)VW, 13%GM, 8%30,00025,00020,00015,00010,000Other, 45%Honda, 6%Toyota, 5%Geely, 5%5,00002011 2012 2013 2014 2015 2

55、016 2017 2018 2019E 2020EIndustry OverviewBMW, 3%Hyundai, 3%Haval, 3%Nissan, 5%Changan, 4%Source: CAAM, J.P. Morgan China Automotive Equity Research Estimates.14Source: CAAM, J.P. Morgan China Automotive Equity Research.Current & Theoretical Number of Vehicles in China, Pro Forma for Various other N

56、ations Vehicle Density Levels (mm of units)Vehicle density comparison indicates significant longer term growth potentialOver time, replacement demand should become an incremental driver of sales as the market matures7006005004003002001000Source: Wards Automotive, CIA World Factbook, J.P. Morgan US A

57、utomotive Equity Research Analysis. Vehicle Density by Nation (units per person as of 2017)0.0Industry OverviewSource: Wards Automotive, CIA World Factbook, J.P. Morgan US Automotive Equity Research Analysis.15YTD through October, new vehicle registrations across the EU ha

58、ve declined 1% and IHS predicts sales will decline another 1% in 2020YTD trends by market: Germany: +3.4% y/y; France: -0.3% y/y; Italy:-0.8% y/y; UK: -2.9% y/y; Spain: -6.3% y/yWe think the implementation of new 2020/2021 CO2 emissions targets and RDE 1 regulations create downside risk to forecasts

59、New emissions standards will likely pressure margins at Europe- exposed OEMs (VW, DAIGR, and BMW in particular among names in our coverage) and have already weighed on some 2020 outlooksDaimler issued lower than expected 2020 margin guidance implying group adj. EBIT 8.5bn (1.0- 1.5bn below JPM and B

60、loomberg consensus estimates)Volkswagen expects compliance with new emission targets will cost1bn, but believes it will be able to offset lower margin on some traditional models with higher margins on new EV modelsFord expects to be able to meet new CO2 emission targets with an expanded line-up of P