September 9, 2013 / 8:12 AM / 4 years ago

RPT-Fitch: German Carmakers Remain Better Positioned than Fiat, PSA & Renault

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Sept 9 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings says that German carmakers remain better positioned than their European peers. The agency has performed a broad comparison of European automotive manufacturers’ business and financial profiles in a new special report.

BMW AG, Daimler AG (A-/Stable) and Volkswagen AG (A-/Positive) continue to demonstrate all the attributes of solid investment-grade ratings. They benefit from strong market shares, broad diversification and solid brand attributes.

Their financial profiles were relatively resilient during the latest crisis and weakened less than the rest of the sector and recovered quickly.

Renault SA’s (BB+/Stable) performance has also been relatively resilient since the 2008-2009 crisis. It could be upgraded if it can sustain positive automotive profitability in the foreseeable future and its operating margins trend towards 3%. We will also assess the group’s ability to generate consistent FFO to demonstrate that improving leverage is coming from underlying operations rather than asset sales and positive working capital, which can be reversed.

Conversely, Fiat S.p.A.’s (BB-/Negative) and Peugeot S.A.’s (PSA, B+/Negative) core European automotive operations have been losing money for several years and both groups’ key credit metrics are extremely weak. They have both lost significant market share in Europe and neither company has managed to recover from the latest sector crisis. PSA’s diversification remains poor, while Fiat’s brand power is weak to allow it to compete adequately in the volume segment.

The full report, entitled “A Comparison of European Auto Manufacturers’ Credit Profiles” is available at or by clicking on the link below. It focuses on the key characteristics that differentiate investment-grade from speculative-grade issuers in the automotive industry. It details the main differences between the groups, including their scale, globalisation and diversification, the power of their brand, as well as profitability development and their financial structures.

Link to Fitch Ratings’ Report: A Comparison of European Auto Manufacturers’ Credit Profiles


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