PEUGEOUT: u/g to Conv Buy from Buy, pt to 14.00 from 12.10
DAIMLER: reit Conv Buy, pt to 83 from 78
FAURECIA: reit Conv Buy, to 37 from 38.50
BMW: u/g to Buy from Neutral, pt 92 from 93
SCANIA: u/ to Neutral from Sell, pt to 132 from 126
VW: d/g to Neutral from Buy, pt to 202 from 238
GKN: d/g to Sell from Neutral, pt to 330 from 370
PIRELLI: d/g to Sell from Neutral, pt 10.60 from 12.00
Overall, we now expect 2014-16 total European light vehicle volumes to grow 3.9%, 6.9% and 4.2% (previously 3.8%, 4.0% and 4.2%).
Western European automotive car sales growth forecasts to 6.4%, 5.8% and 3.1% in 2014-16 (previously 3.2%, 4.7% and 2.9 %),
Eastern Europe (including Turkey) we lower our 2014 light vehicle sales growth forecasts to flat (from +5.0%) for Russia to -5.0% (from +4.0%).
Goldman Sachs Global Investment Research
Europe: Automobiles
Published February 11, 2014
One step forward (WE), one step back (EM); remains Attractive
Upgrading our WE light vehicle growth forecast to 6.4% in 2014… We upgrade our Western European automotive car sales growth forecasts to 6.4%, 5.8% and 3.1% in 2014-16 (previously 3.2%, 4.7% and 2.9 %), primarily on significantly improved European consumer confidence, historically a good leading indicator for car sales. A pick-up in volumes should also provide a supportive environment for a recovery in pricing; we model a 250 bp improvement in net pricing over 2014-16.
…but offset by weaker outlook for EE and Russia To reflect increased economic uncertainty and resulting risks to consumer spending, we lower our 2014 light vehicle sales growth forecasts to flat (from +5.0%) for Eastern Europe (including Turkey) and -5.0% (from +4.0%) for Russia. Overall, we now expect 2014-16 total European light vehicle volumes to grow 3.9%, 6.9% and 4.2% (previously 3.8%, 4.0% and 4.2%).
Updating forecasts for foreign exchange headwinds Since the beginning of the year, we have seen significant foreign exchange moves, particularly from the devaluation of various emerging market currencies. A volume-weighted basket of emerging market currencies has moved -1.5% relative to the euro since the beginning of the year. For our OEM coverage, we now estimate a total of €4.25 bn FX headwinds to profits over 2014-16, 14% of total 2013E EBIT.
Peugeot added to CL Buy; Daimler and Faurecia remain CL Buys On the back of our more positive view on Western Europe and more clarity around the intended €3 bn capital raising, we add Peugeot (Buy) to our Conviction List with a new €14 12-month price target. We continue to prefer Daimler among European OEMs (new 12-month price target €83) as returns continue to expand (140 bp over 2013-18E) and Faurecia among suppliers (new 12-month price target €37).
Upgrade BMW to Buy and Scania to Neutral; downgrade VW to Neutral, and GKN, Pirelli to Sell We upgrade BMW to Buy (new 12m price target of €92) and Scania to Neutral (new 12m price target of Skr132). Concurrently, we lower our ratings on VW to Neutral (new 12m price target of €202), GKN to Sell (new 12m price target of 330p) and Pirelli to Sell (new 12m price target of €10.6) owing to above-average exposure to emerging market FX and risks.