EUROPEAN AUTOS: Getting Ready For The China Warnings - Cutting Estimates and PTs
Chinese auto market profitability is rolling over and it's getting bad enough to threaten German OEM earnings. The issues predate the August stock market rout, with the auto industry facing some sector-specific problems as pricing unravels.
We've already seen some pain in Q2 results, but we're convinced there's worse to come. BMW & VW will soon have to start talking about overall targets. Daimler will be the last to see it but that may ultimately make the process even more painful.
We are cutting our H2 and 2016 numbers for all three Germans. We're now below cons. by between 13% (BMW) & 22% (DAI). Perhaps we'll prove to be too early but we're convinced the trend is downwards and that everyone is using the wrong 2016 numbers.