Looking Into The Next Cycle; Initiating on Global Auto OEMs
We initiate coverage of eight OEMs. We don’t share the bear view on demand, forecasting 3%+ global unit growth mid-term, though the pace of Europe is at risk. 'New Autos' concepts stimulate demand, but required investments create material headwinds for returns. Growing earnings complexity depresses multiples. Attractive EV ratios mask lack of equity leverage and peak returns. We rate BMW, FCA, PSA as Buys and VW, Renault, Ford as Underperforms.