Automotive Sector Transformation
The automotive sector is undergoing a fundamental shift in terms of how cars are made, used and financed. Driven by technology, sustainability and changing consumer preferences, this transformation will have major ramifications for sectors globally.

  • Sector Comment
    10 Jun 2022|Moody's Investors Service
    The European Union's parliament voted to support a target of zero emissions for new passenger cars and light commercial vehicles across the bloc by 2035. The vote puts further pressure to modernize on automakers and parts suppliers in the European market that still rely heavily on internal combustion engines. These companies will need to make substantial investments, more quickly than previously expected, to develop and launch new battery electric vehicles and related parts. The decision is credit negative for automakers and parts suppliers, putting cash flows under even more pressure and potentially leading to restructuring costs for existing plants.

    Sector Comment
    04 Apr 2022|Moody's Investors Service
    We lowered light vehicle sales growth estimates to 3.3% for 2022 with the invasion of Ukraine putting further stress on the already struggling automotive supply chain. Indirect effects of the invasion include higher prices for energy and commodities, such as metals, for which Russia is a major supplier. Higher material prices result in higher production costs and ultimately prices for vehicles and could, together with higher energy costs, weigh on consumer sentiment. The European auto market’s recovery will be hit hardest, while our forecasts for North America are largely unchanged.

    Sector Comment
    24 Mar 2022|Moody's Investors Service
    The Russia-Ukraine conflict drove already elevated prices for commodities like aluminum, nickel and palladium even higher, which will weigh on automakers' operating margins. The invasion also puts further stress on an already strained global automotive supply chain, that prompted shutdowns at some European assembly plants. At this time we do not expect additional disruptions in semiconductor manufacturing, which is already limited vehicle production. 

    Sector Comment
    04 Mar 2022|Moody's Investors Service
    The military invasion of Ukraine by Russia poses increasing risks to the European automotive industry supply chain and ultimately production and sales of vehicles. Conflict-related disruption of parts will cause temporary automotive manufacturing outages, which we expect to last a few weeks, at least. While mitigation measures could offset the credit negative effects throughout this year, there are increasing downside risks for our expectation of an 8% recovery in European light vehicle sales for 2022. Commodity price inflation and repeated waves of coronavirus infections pose risks to our forecast. 

    Issuer In-Depth
    01 Mar 2022|Moody's Investors Service
    Toyota’s significantly increased battery electric vehicle (BEV) sales target will allow it to catch up in this segment versus its peers. We estimate BEVs could account for a third of Toyota’s unit sales by 2030 if its push succeeds, making it a significant BEV competitor in global markets.

    Sector Comment
    13 Jan 2022|Moody's Investors Service
    Growth reflects recovery in automobile production supported by an improvement in the supply of chips and the steady demand for automobiles in China.

    07 Dec 2021|Moody's Investors Service
    Exposure to environmental, social and governance (ESG) considerations is materially credit negative for vehicle manufacturers predominantly because of carbon-transition risks and, in some cases, relatively poor governance. Credible, successful steps to diminish carbon risk and conservative financial strategies and risk management are mitigants. While exposure is still negative for automotive parts suppliers, the effect is more differentiated.

    19 Oct 2021|Moody's Investors Service
    A continued shortage of semiconductors and other parts led us to cut our global light vehicle sales forecast to 80 million this year from 83 million. Lower production, coupled with already low inventories and strong customer demand mean automakers will reap record margins over the next 12-18 months on the vehicles they are able to manufacture, largely offsetting low volume. Auto parts suppliers selling at contracted prices will record lower margins given the decline in vehicle production.

    30 Sep 2021|Moody's Investors Service
    Accelerating sales of alternative fuel vehicles, especially battery electric vehicles, will increase residual value risk for captive auto finance companies and collateral risk for auto loan and lease asset-backed securities. There will be challenges building, marketing and financing electric vehicles profitably, but captives can manage the effects of the transition and retain a vital role in auto sales and finance.

    08 Jul 2021|Moody's Investors Service
    The automotive manufacturing industry has high social risk, with elevated exposure to demographic and societal trends, responsible production and human capital considerations. Product recalls, supplier network disruptions and labor actions can pose significant risks, while stricter environmental regulations and evolving consumer preferences are driving growth in electrified vehicle production and greater use of mobility services.

    23 Jun 2021|Moody's Investors Service
    Our latest carbon transition assessments (CTAs) for global automakers have improved since we first published automaker CTA scores in 2019. The median CTA score for 19 leading automakers is CT-5, indicating strong positioning on our 10-point CTA scale. This represents a one-notch improvement from the previous median score of CT-6, which reflected moderate positioning.