AUTOMOTIVE

Covid-19-related historical slump is adding pressure on structural challenges

S

SENSITIVE RISK for entreprises

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

  • Intensifying consumer appetite for alternative-fueled vehicles and new mobility services
  • Diversity of local needs (i.e. city cars in China, pickups in Thailand)
  • Emerging Market fundamentals (growing middle-class, low equipment rate), supporting the mid-term perspectives of the market
  • Demand for premium models and larger Sports Utility Vehicles (SUV), supporting carmakers’ profitability
  • Expertise of established players on differentiation (i.e. design), production and supply-chain issues
  • New car sales’ dependency on public measures (subsidies, tax exemptions), monetary policies (borrowing cost), oil prices (running costs) and prices on in the second-hand market
  • Intensifying environmental requirements (pollution, CO2 emissions) necessitating heavy investments and leading to high(er) car prices
  • Value proposition of EVs in the short-term, due to the battery cost, driving range and expansion of the charging network
  • Market maturity in advanced economies - and smaller driving prevalence among the younger generation in large cities - leads to strong competition (price and innovation)
  • Competition from tech giants and startups in the field of connected and autonomous driving technologies

Key players

Country Role Sector risk
China

#1 market by number of new car registrations

C

Sensitive risk

United States

#2 market by number of new car registrations

C

Sensitive risk

Japan

#3 market by number of new car registrations

B

Medium risk

India

#4 market by number of new car registrations

C

Sensitive risk

Germany

#5 market by number of new car registrations

C

Sensitive risk

Contact Euler Hermes

Economic Research Team

research@eulerhermes.com

Risk Analyst

Maxime Lemerle

maxime.lemerle@eulerhermes.com

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