春季高档汽车行业更新

1、High Grade AutomotiveSpring 2019 Update | April 2019High Grade Autos/Auto PartsJonathan Rau, CFA 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 certif

2、ication 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 repo

3、rt. Investors should consider this report as a single factor in making their investment decision.PageSector Outlook/Credit Update2Industry Overview8Bond Performance & Relative Value222We remain Neutral the Automotive Manufacturing sub-sectorUS auto market should remain resilient. We expect domestic

4、auto sales to remain resilient in 2019 given the relative age of the car parc and a still healthy economic backdrop (the labor market remains tight and consumer confidence has rebounded post the late 2018 bout of market volatility), though the y/y tax reform benefit is likely to fade as 2019 progres

5、ses. Vehicle mix has strengthened, a trend we expect can continue throughout 2019 given GM and others plans to reduce passenger car footprints and despite continued declines in incentive spending. Gasoline prices have risen but remain moderate in a historical context, while the move lower in interes

6、t rates (and significantly reduced rate hike expectations) should be helpful from a vehicle affordability perspective. IHS forecasts US auto sales at a mid to high 16mm rate over the next 3 years, which we think would provide a supportive environment for credit.Balance sheets are in solid shape. Rel

7、ative to growing macro concerns around overleveraged BBB capital structures, Fords and GMs balance sheets are conservative with low pension-adjusted leverage and large cash balances.China/Trade is the wild card. China is arguably the second most important region for the domestic manufacturers, and a

8、uto sales in this market have slowed meaningfully in recent months. An eventual trade agreement between the US/China and additional Chinese government stimulus efforts could help from a demand perspective. We think the successful renegotiation of NAFTA earlier this year largely de-risked auto trade

9、with Mexico and Canada though the administration continues to explore the possibility of implementing auto tariffs on national security grounds which could further weigh on industry and consumer costs and demand. Separately, commodity prices are likely to remain a headwind for automakers in part dri

10、ven by steel and aluminum tariffs enacted earlier this year.We think valuation is fair at current levels. Automotive manufacturing remains the cheapest sub-sector in our JULI index with spreads 150bp wide to the broader market on a duration adjusted basis. However, we remain at Neutral given the hei

11、ghtened near- term risk of a Ford downgrade to Ba1 by Moodys (given Fords relative weighting in the index).We remain Neutral on the more globally exposed Automotive FinCo sub-sectorCaptive auto fundamentals mainly healthy. We remain mostly comfortable with the captive auto sub-sector from a fundamen

12、tal perspective for many of the reasons cited above, as well as stable consumer credit trends, ample liquidity at the FinCos and a healthy ABS market. Stretched lending metrics, as measured by increased reliance on vehicle financing and longer loan terms, are areas of concern.Sector Outlook/Credit U

13、pdateEuropean auto market remains challenged. The Automotive FinCo sub-sector is more globally exposed, and European automaker profitability remains broadly under pressure owing to various factors including: 1) softer regional demand (WLTP overhang, Brexit uncertainty, Turkish economic concerns), el

14、evated investment (to fund vehicle electrification and AV efforts), and commodity cost headwinds. Our Europe equity research counterparts expect production in the region to decline 6.5% y/y in 1H19 and rebound in 2H19 to finish the year down 2.9%. While Section 232 tariffs are not our base case, we

15、believe foreign OEMs would be poorly positioned if such a scenario were to occur given the aggregate level of imports to the US market.Relative value. Sector spreads 85bp wide to our JULI Index partially reflect wider trading levels for Ford. We await the resolution of Moodys Negative outlook on For

16、d and signs of improving demand in Europe and China to potentially turn more constructive.3We remain Underweight the Automotive Supplier sub-sectorSuppliers are more globally exposed. Suppliers more globally diversified footprints leave them exposed to softer vehicle production in Chinese and Europe

17、an markets.Event risk concerns. While most M&A activity 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 rating

18、s. We think the cost of capital incentive to remain investment 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.Tight

19、er spreads. Valuation is not compelling in our view at levels now wide to the HG market but significantly tight to the Auto Manufacturers and Auto FinCos, especially considering limited liquidity across most supplier capital structures.JULI IndexJULI AutomotiveJULI Auto ManufacturingJULI Auto Financ

20、e CompaniesJULI Auto Suppliers40035030025020015031-Dec-187-Jan-1914-Jan-1921-Jan-1928-Jan-194-Feb-1911-Feb-1918-Feb-1925-Feb-194-Mar-1911-Mar-1918-Mar-1925-Mar-19100Sector Outlook/Credit UpdateSource: J.P. Morgan.4We met with senior leadership from Ford/Ford Credit (including Ford President of Globa

21、l Operations Joe Hinrichs, Ford CFO Bob Shanks, Ford Credit CEO David McClelland, and Ford Credit CFO Brian Schaaf) and General Motors/GM Financial (including GM Treasurer Rocky Gupta, GM Head of Investor Relations Michael Heifler, GM Financial CFO Susan Sheffield, GM Financial Treasurer Rick Gokenb

22、ach, GM Financial Investor Relations Stephen Jones) in Detroit on 3/25. Key takeaways from our meetings are below:Ford Motor/Ford CreditChina Operations Remain Challenged. The reception of new product has been mixed. Demand for the new Focus and Escort sedans (a key high volume segment) has been dis

23、appointing, while demand is very strong for the Territory small SUV. Away from new product introduction, Ford continues to face complex issues with dealers and distribution networks, though these relationships have improved (and dealers have returned to profitability). Inventories remain reasonably

24、healthy. Ford expects China auto sales to be flat to slightly down in 2019.Europe & South America Restructuring in Progress. Restructuring is progressing according to plan, and Ford has experienced lower than expected resistance from stakeholders in these regions (and indicated potential downside to

25、 the $7bn/$11bn figures). 80-90% of cash costs will relate to Europe and South America, with the $7bn to be roughly split across 2019-2021. The payback period on headcount-related restructuring is roughly 2-3 yrs.Fitness Redesign Implementation on Schedule. Major initiatives are on schedule, and For

26、d is 40-45% completed with the implementation of these actions. The vast majority of savings have not yet been realized as the $25bn of previously identified cost/capex savings will be back-end loaded.Sector Outlook/Credit UpdateFirm Commitment to $20bn Cash Target. Absent a US recession, Fords cash

27、 balance will NOT fall below$20bn. The company could issue debt to fund restructuring. Ford believes the rating agencies are highly focused on Fords ability to improve operations globally (less so on balance sheet policy).Source: J.P. Morgan.5Ford Motor/Ford Credit (continued)Residual Values Trendin

28、g In-Line. Management is seeing a seasonal spring uptick in residuals, which gives the company confidence in its guidance (for residuals to decline 4% at constant mix in 2019).General Motors/GM FinancialTransformation/Restructuring Efforts. Only a small portion (40 months of y/y increases)Incentive

29、spending remains historically high, but trends are less concerning when viewed in the context of average transaction prices (ATPs)ATPs, which are measured after the effect of incentives, continue to rise y/y Incentives as % of New Vehicle ATPsAverage Transaction Prices and y/y ChangeSep-18, 11.3%Feb

30、-19, 10.6%13.0%12.0%$35,500Average Transaction Prices ($/unit) Y/Y Change in Transaction Prices (%)8.0%11.0%$34,5006.0%10.0%9.0%$33,500$32,5004.0%2.0%8.0%7.0%$31,500$30,500Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18Dec

31、-18$29,5000.0%-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-18Jan-19-4.0%Industry OverviewSource: TrueCar.Source: TrueCar.11We expect mix shift out of sedans into the crossover/SUV Trucsegment to continue throughout 20

32、19 given GM and others45%plans to reduce passenger car footprints and despite40%continued declines in incentive spending, though we are35%cognizant of the increasing number of CUV offerings30%expected to come to the market in the coming year(s)25%ks and Utilities Gaining ShareGas prices have risen s

33、teadily in the past six weeks but remain moderate in a historical contextThe light truck/utility segment has accounted for 68.8% of sales (passenger cars 31.2%) on a YTD basis, up from 66.7% in the prior-year period20%Small Pickup Middle Sport-Utility MinivanLarge PickupSport Wagon/Crossover15%10%5%

34、0%Source: J.P. Morgan Automotive Equity Research, Autodata. Retail Gasoline Prices vs Light Truck Sales While Passenger Cars Continue to Decline$4.50$4.00$3.50$3.00$2.50$2.00$1.50$1.0040%45%50%55%60%65%70%75%Retail gasoline price (USD/gallon)Light truck sales as % of total (inverse scale)30%Middle C

35、arsSmall CarsLarge CarsLuxury Cars25%20%15%10%5%0%Industry OverviewSource: US Department of Energy, Bloomberg, Autodata.Source: J.P. Morgan Automotive Equity Research, Autodata.12 Consumer Confidence vs. SAARU.S. Household Debt to Disposable Income20120U.S. Light Vehicle SAAR (mm)1811016100149012801

36、070860650130U. Mich. Consumer Sentiment Index12512011511010510095Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17Jun-1890U.S. Light Vehicle SAAR (12-mo. avg.)Univ. of Mich. Consumer Sentiment Index (12-mo. avg.)Source: Autodata, W

37、ardsAuto Group, University of Michigan.Source: Bloomberg. Disposable Income and Consumer SpendingUS U-3 Unemployment Rate10.0%8.0%6.0%4.0%2.0%0.0%-2.0%-4.0%Industry Overview-6.0%Disposable Income (% chg y/y)Consumer Spending (% chg y/y)12.00%10.00%8.00%6.00%4.00%2.00%Dec-03 Aug-04 Apr-05 Dec-05 Aug-

38、06 Apr-07 Dec-07 Aug-08 Apr-09 Dec-09 Aug-10 Apr-11 Dec-11 Aug-12 Apr-13 Dec-13 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Dec-17Aug-18Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Jan-190.00%Source: Autodata, WardsAuto Group, University of Michigan.Source: Bloomberg (USURTOT Index), US

39、Bureau of Labor Statistics.13Auto FinancingJPM economists now expect no additional rate hikes in 2019 (and just one in late 2020), which should provide incremental support from a vehicle affordability perspective, assuming economic growth remains intactOur interest rate strategy team expects 5yr US

40、Treasury Yields to rise to 2.65% by 4Q19 (vs. 2.21% as of 28-Mar-19)Historically low interest rates, longer financing terms, and growing reliance on leasing have supported consumers increasing preference for more expensive vehicles JPM 2019 Interest Rate ForecastYTD 19 3/28/20192Q193Q194Q191Q20chg (

41、bp) 2yr US Treasury2.242.552.552.702.80-255yr US Treasury2.212.502.502.652.75-3010yr US Treasury2.392.702.752.903.00-29Source: J.P. Morgan. UST Yields are higher Y/Y3yr UST Yield (%)5yr UST Yield (%)7yr UST Yield (%)3.50%3.00%2.50%2.00%1.50%1.00%Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-1

42、7Feb-17 Mar-17 Apr-17 May-17 Jun-17Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18Feb-18 Mar-18 Apr-18 May-18 Jun-18Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19Mar-190.50%Industry OverviewSource: Bloomberg.14RatesIncreased financing penetration increases the sectors sensitivity to intere

43、st ratesJust over 85% of new vehicle transactions were financed (either through loans or leases) in 4Q18, up from 78% in 2006Average loan terms on new vehicles have plateaued at 69 monthsWe question how much further auto lenders can extend loan terms and utilize leasing to reduce the impact of risin

44、g ATPs on monthly vehicle payments Leasing Penetration35%30%25%20%Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18Dec-1815% of new vehicles that are leasedSource: Experian Automotive. % of New Vehicles Being FinancedAverage Loan Term6969

45、676865656664636263636461595958576363626088%7586%84%7082%6580%78%6076%Dec-06 Aug-07 Apr-08 Dec-08 Aug-09 Apr-10 Dec-10 Aug-11 Apr-12 Dec-12 Aug-13 Apr-14 Dec-14 Aug-15 Apr-16 Dec-16 Aug-17 Apr-18 Dec-1874%55Industry OverviewNew vehicles with financing50200820092010201120122013New2014Used2015201620172

46、018Source: Experian Automotive.Source: Experian Automotive.15Underwriting standards remain stable as measured by average FICO score, while delinquency rates have declinedFirmer than expected used vehicle prices in 2018 have helped from a loss severity/recovery perspectivePrime and Super Prime borrow

47、ers increasing share of new vehicle loan/lease originations; leasing becoming an increasingly prime productDelinquency Rates (% of Total Outstanding Loan Balance)3.0%2.5%2.0%1.5%1.0%0.5%0.0%2.22%2.26%2.38%2.41%2.48%2.39%2.34%0.78%0.55%0.58%0.61%0.68%0.75%0.78%4Q124Q134Q144Q154Q164Q174Q1830 days past

48、 due60 days past due New Vehicle Loan/Lease Credit Risk DistributionSource: Experian Automotive. Average FICO Scores for New/Used Vehicle Loans100%90%80%70%60%50%40%30%20%10%0%201320142015201620172018Super PrimePrimeNonprimeSubprimeDeep Subprime7407200.7%10%0.6%9%26%30%29%28%28%28%39%43%43%44%45%45%

49、19%16%17%18%18%17%0.7%9%0.9%11%0.8%11%1.3%15%7006806606406206007167147127147167186566596466486496544Q134Q144Q154Q164Q174Q18NewUsedIndustry OverviewSource: Experian Automotive.16Source: Experian Automotive.Ford Credit realized stronger than expected residual values with 36-month auction values up 3.6

50、% y/y at constant mix for FY18, though it expects FY19 average auction values to be 4% lower y/yGM Financial residuals also outperformed expectations (flat y/y vs. an expected 4-5% decline for FY18). For 2019, GM Financial anticipates used vehicle prices will decline 4-5%These forecasts appear consi

51、stent with the YTD decline in the J.D. Power Used Vehicle Price index J.D. Power (formerly NADA) Used Vehicle Price Index124122120118116114112110108NADA Used Vehicle Price IndexYoY % change5.0%3.0%1.0%-1.0%-3.0%-5.0%-7.0%Industry OverviewSource: J.P. Morgan, J.D. Power Valuation Services.17Elevated

52、Commodity Prices a Headwind for Automakers & SuppliersElevated commodity costs in part driven by Section 301 tariffs on imported steel and aluminum have pressured automaker and supplier margins in 2018 (General Motors, Fiat Chrysler, Ford all cited raw material costs as a headwind to 2019 results)Ap

53、proximately 65% of an average light vehicles weight is comprised of steel and aluminumWe expect commodity prices to remain a headwind for automakers, and to a lesser extent suppliers given contractual pass-throughs, for at least the first half of 2019 (steel and aluminum tariffs were formally implem

54、ented in May 2018) Key Commodities in a Vehicle40%20%0%-20%Industry Overview-40%20152016201720182019 YTD39%34%25%20% 2017%18%17%1417%15%11%6%3%2%5%-4%-2%-4%-10%-8%-12%-9%-17%-21%-20%-27%-26%-32%-30%Hot Rolled SteelCold Rolled SteelAluminumNatural RubberSynthetic RubberWeighted CommodityIndexSource:

55、J.P. Morgan Automotive Equity Research, Bloomberg.18International trade developments are likely to be a key catalyst for the automotive sector, both to the upside and downsideGiven largely localized production in China, the US manufacturers are less directly exposed to the ongoing trade dispute than

56、 some of the international OEMs with US production facilities. However, manufacturers and suppliers (with varying degrees of China exposure) have suffered from a meaningful slowing in new vehicle sales in this market over the past 6+ months, perhaps a secondary consequence of the trade disputeRecent

57、 progress in US-China trade negotiations is a positive development on this frontThe successful renegotiation of NAFTA earlier this year largely de-risked trade with Mexico and Canada. However, the administration continues to explore the possibility of implementing automotive tariffs on national secu

58、rity grounds (Section 232) with the EU, Japan, and South Korea, which (while not our base case) could further weigh on industry and consumer costs and demand3,0002,5002,0001,5001,000 US automotive trade deficit ($bns)19253(138)Largest vehicle importers to the US in 2018 (000s of units)2502,6641,7231

59、,673831451200150100500(50)(100)(150)(200)500Industry Overview0MexicoJapanCanadaKoreaGermanyUS ExportsUS ImportsTrade DefecitNote: Data includes exports and imports of new passenger vehicles and light trucks.Source: U.S. Department of Commerce.19China is arguably the second most important region for

60、the domestic manufacturers, and auto sales in this market have contracted meaningfully over the past 6+ monthsOn a y/y basis, passenger vehicle sales declines have accelerated since Jul-18, declining 17.7% and 17.4% y/y in Jan and Feb-19Sales will likely see further weakness in Mar as consumers dela