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15 May 2019 by jbchevrel

Autos have outperformed the broader market lately. Today F -9 GM -3 in the US, FRFP DAIGR BMW VW are -1/-3. In stocks space, Faurecia +5% BMW +3% DAI +3% are also amongst best performers. This contrasts with 2018, where trade tensions were most often coupled with Autos/Auto parts underperformance. Indeed, finished vehicles were not in the list of the goods China will add tariffs on. They are currently at 15% and won’t get to 40%, as of now. Within the auto sector, US tire companies (CTBUS, GT) underperformed as they will see Chinese tariffs hiked from 5% to 10%. On May 9, Reuters had reported automakers expect Trump to delay 18 May by up to 6m. 90-day deadline was indeed reported to be a soft one. Today’s headlines echoed that, adding a little bit of outperformance. That comes after a mixed earning season for German autos. Earlier this month, BMW had reported a surprisingly resilient q1, excl. the impact of bigger than expected provision (€1.4b vs €1.1b cons). Auto EBIT came €1,090m ~ cons. But Group EBIT came €1,989m vs cons €1,753m with Motos/FS beating. In Apr, DAIGR had had a weaker q1, EBIT €2,084m (excl. €718m one-off) vs cons €2,246m. Big vehicles drove the miss @ DAIGR. Van (-€98m EBIT vs cons +€110m) along with Bus (-€21m EBIT vs consensus -€5m) divisions. FCF -€2b vs +€2b in 18 also - same as BMW - due to inventory build. On the other side of the Atlantic, as I commented previously in this blog, Ford (F) enjoyed a nice q1 beat. CDS -41bp intraday, after EPS came 44c vs cons 26c with Auto rev in line ($37.2b vs cons $37.0b) and Auto EBIT $300m higher. Those + news being mentioned, it is worth noting that headlines today reported a delay (up to 6m), not an outright cancellation of auto tariffs. PEUGOT clearly the underperformer over the past month, as reports of M&A talks with JLR picked up. Although those have been denied by Tata and PSA. No smoke without fire (?)