Automobiles
Global Research 24 March 2020
Global Autos
OEMs: Navigating coronavirus and recession risk
Cutting global car sales to -9% in 2020; stimulus could kick in in H2
With lockdowns spreading across major car markets and recession risk rising, we expect a steep
decline in global car sales and production by 9-10% y/y in 2020. H1 will likely look much
worse, with US/Europe down 35-45%. While current emergency fiscal measures are
focused on providing stability to the system, we expect car specific stimulus to kick in
later this year as it has proven to be a very effective instrument in previous crises.
New OEM estimates: Expect >50% decline in EBIT, balance sheets in focus
We forecast EBIT (2020E) of our global OEM coverage to fall -54% y/y in our base case and
>75% in our downside case. A key focus is now on balance sheets and liquidity. BMW and
VW are the OEMs with the strongest balance whereas FCA, Ford, GM and Renault would
drop into nebt debt territory in our downside scenario. The negative NWC of US and
southern EU OEMs can become a negative swing factor. Large fincos could bear additional
risk.
What can we learn from the financial crisis and what's priced in now?
Auto stocks fell by ~50% ytd, vs. -65% during the 2008 financial crisis. Valuations on P/S
and P/B basis are at all-time lows at and , respectively. We believe these multiples
discount, at least to a large degree, a scenario similar to 2008/09, when global car sales
dropped ~17% ex-China. The current market cap of BMW and some other OEMs has even
fallen below the current net cash and the book value of the finco (2019 y/e). This territory
appears attractive for selectively buying our best ideas with a 12m view, even though the
trough may not be reached just yet.
Key rating changes: Upgrade BMW to Buy & Tesla to Neutral; Downgrade Ford We
upgrade BMW to Buy from Neutral on its resilient balance sheet, strong track record from
past crises in terms of cost flexibility and low finco losses. VW remains the other key Buy idea
on its stronger-than-ever balance sheet and cash generation. We upgrade Tesla to Neutral
from Sell on relatively high demand visibility and its sustained tech leadership – the flipside
is the net debt position that could raise concerns in a downside scenario. We downgrade F
to Neutral from Buy and prefer GM on better underlying earnings & FCF power.
Figure 1: UBS global OEM coverage – Rating & PT changes and coronavirus impact at a glance
Patrick Hummel, CFA
Analyst
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David Lesne
Analyst
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Paul Gong
Analyst
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Kohei Takahashi
Analyst
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Eugene Jung
Analyst
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Sonal Gupta
Analyst
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Sabrina Reeh
Analyst
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Benedikt Baumann
Analyst
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+41-44-239 1398
OEM P rice P T o ld P T new SELL N EUT R A L B UY Upside P E 20 E C o mment
BM W 33% M ost resilient balance sheet , f lexible cost base and st rong crisis track record
DAI 1% Lower earnings and cash generation than BM W, net liquidity likely to drop below €10bn
FCA 2% Swing in NWC could be a drag on FCF; merger terms with PSA at risk due to planned special divi
PSA 2% Relatively solid balance sheet and st rong track record in cost cut t ing; negative NWC a concern
RNO 6% nm FCF likely to turn negative but B/ S should be solid enough; earnings to drop towards break-even
VW 50% Solid balance sheet and st ronger than ever FCF provides cushion, but high operating leverage
Fo rd -1% 37x Relatively solid B/ S but soft execution and cash generation –swing in NWC is a key risk
GM 49% Better op. performance than F, but NWC swing and subprime exposure in f inco
Tesla 428 410 420 -2% nm Only OEM with net debt but best order backlog and undisput ed EV tech lead
Hyunda 71,100 170,000 100,000 41% Solid ex-f inco B/ S and st rong margin recovery from low base, but high f inco exposure a concern
Kia 24,150 150,000 31,000 28% Solid net liquidity at net cash posit ion, st rong volume upside from India expansion
Tata 77 285 130 68% Low profitability and weak balance sheet makes is very vulnerable in a downturn
Source: UBS estimates; Priced as of 3/23/2020
Global
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This report has been prepared by UBS Europe SE. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE
23. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a
na
-11 -12 -11
-
7%
-
2%-10 -11 -12 -7%
-27%
-42%
-55% -54% -54%
-49%
-54%
%%%%%%
This report lays out our latest thinking how coronavirus and recession risk could play
out in the global autos space. We now expect a 9% & 10% drop in our global auto
sales & production model as a base case for 2020E and break it down on company
level. The results are substantial changes in ratings, price targets and earnings
estimates. Further, we look into what's already priced in and how this compares to
the situation during the financial crisis. Lastly, we provide a downside case
scenario analysis for earnings and balance sheets that take the global financial
crisis as a benchmark (ex-China, which was growing back then).
Key rating & PT changes in UBS OEM coverage
Changes in financial estimates
We have applied our new forecast of a ~9% global volume decline for 2020 in our
company models. The operating leverage for OEMs, ie, the drop-down to EBIT, is about
30% on average (higher for companies with high vertical integration, such as VW,
Daimler and Tesla). On top, we have assumed higher pricing pressure and some additional
costs of plant closures.
Figure 2: Drop in revenues and EBIT by OEM y/y (2020E)
OEMs have ~30% operating
leverage, plus production
shutdown costs and pricing
pressure on top
20%
Ford Renault BMW FCA Daimler VW PSA GM Tesla Average
15%
0%
-20%
-40%
-60%
-80%
-100%
-
81%
-72%
Sales y/y EBIT y/y
Source: UBS estimates Note: GM was affected by a 40-day strike in NA in 2019
As a rule of thumb, we expect an average cost of ~€100-150m per day of lost
production for the large OEMs (as a reference, GM lost $ EBIT during a 40- day
strike when all its US plants were halted). Assuming that ~1 month of production
will be lost in Europe and the US that cannot be recovered, there would be a total
EBIT impact of ~€2-4bn per OEM (the impact is smaller at Tesla). Such scenario is covered
by our new base-case forecast. It has to be assumed that lost production cannot be fully
recovered even in case of a full normalization by summer, which appears an
optimistic assumption anyway. Any prolonged production shutdowns would likely
result in a more severe financial impact.
Our base case covers ~1 month
production shutdown, with
~€100-150m cash loss per day
Figure 3: Changes in key financial estimates
2020E 2021E 2022E
Old New (%) Old New (%) Old New (%)
Sales 101,400 92,734 -9% 99,768 101,412 2% 102,725 105,331 3%
EBIT 7,674 3,951 -49% 6,949 5,722 -18% 7,044 6,419 -9%
EBIT margin (%) % % % % % %
EPS (underlying) -41% -12% -3%B
M
W
DPS -67% -17% 0%
Sales 169,458 155,354 -8% 172,929 168,810 -2% 176,574 173,866 -2%
EBIT 7,582 4,641 -39% 8,052 6,595 -18% 9,467 8,383 -11%
EBIT margin (%) % % % % % %
EPS (underlying) -33% -21% -13%D
ai
m
le
r
DPS - -100% 0% 0%
Sales 111,089 100,676 -9% 113,422 113,029 0% 115,368 114,908 0%
EBIT 6,823 3,036 -56% 6,529 5,856 -10% 6,279 6,001 -4%
EBIT margin (%) % % % % % %
EPS (underlying) -78% -14% -6%F
C
A
DPS - nm -12% -5%
Sales 254,846 225,323 -12% 259,939 251,616 -3% 265,208 256,652 -3%
EBIT 18,959 9,956 -47% 19,147 16,774 -12% 19,893 17,829 -10%
EBIT margin (%) % % % % % %
EPS (underlying) -49% -12% -9%V
W
DPS -19% 0% -10%
Sales 54,851 48,724 -11% 55,281 50,854 -8% 55,853 51,390 -8%
EBIT 1,956 750 -62% 1,617 595 -63% 1,694 665 -61%
EBIT margin (%) % % % % % %
EPS (underlying) () nm -81% -81%R
en
au
lt
DPS -63% -93% -93%
Sales 72,569 66,028 -9% 74,240 71,599 -4% 75,927 73,613 -3%
EBIT 6,090 3,673 -40% 5,567 3,672 -34% 5,549 3,636 -34%
EBIT margin (%) % % % % % %
EPS (underlying) -67% -52% -51%P
SA
DPS -50% -40% -40%
Sales 33,083 28,358 -14% 40,537 38,430 -5% 48,897 48,317 -1%
EBIT 2,257 1,241 -45% 3,564 3,178 -11% 5,077 4,935 -3%
EBIT margin (%) % % % % % %T
es
la
EPS (underlying) -62% -13% -3%
Sales 136,710 120,610 -12% 140,056 129,383 -8% 144,262 133,386 -8%
EBIT 10,703 3,700 -65% 10,705 7,200 -33% 11,445 9,200 -20%
EBIT margin (%) % % % % % %
EPS (underlying) -61% -45% -30%G
M
DPS - -100% 0% 0%
Sales 139,411 127,993 -8% 144,238 138,208 -4% 146,785 137,119 -7%
EBIT 7,671 730 -90% 9,989 4,541 -55% 10,573 5,444 -49%
EBIT margin (%) % % % % % %
EPS (underlying) -93% -55% -43%F
or
d
DPS - nm 0% 0%
Source: UBS estimates
BMW upgrade to Buy – €53 price target (from €68)
Why do we upgrade? BMW is amongst the OEMs with the strongest balance sheets
(€18bn net cash), has shown in the past that its cost structure is more flexible than
sector average, and faces a relatively low CO2 compliance risk in the EU. With a
supportive product mix (new SUV portfolio) in the next few quarters we see an attractive
risk/reward at the current level. The large finco represents an above-average risk but
BMW steered its finco relatively well through the financial crisis (the worst finco loss
was € in 2008). In a nutshell, we upgrade because we think the market discounts a
too bearish liquidity / balance sheet scenario.
What is priced in at current levels and how does it compare to previous
shocks? BMW shares fell ~50% ytd and currently discount a scenario worse than during
the 2008/09 financial crisis, in our view. This can be evidenced by P/S and P/B ratios,
which are at all-time low levels: P/S is at vs and P/B is at vs back then.
Further, shares are discounting a liquidity & balance sheet stress scenario. The net cash
position and the finco book value (2019) represent 136% of
Analyst: Patrick Hummel
the current market cap – the second highest ratio in the peer group, in spite of
BMW's strong balance sheet with the highest credit rating amongst EU OEMs.
How have our estimates changed and how do they compare with what's priced
in? Our EPS cut for 2020E by 41% compares to a drop in shares by ~50% ytd. BMW has
already cut its auto margin outlook by 400bps to 2-4% (UBSe %) to reflect the
latest developments. Our 2021 estimates factor in a moderate recovery to ~4% auto EBIT
margin, which is still well below the previous 6-8% target range for 2020. Based on
our new estimates, we derive a €53 price target (from €68), which is based on a blend of
a DCF (€71) and 7x target PE (€34).
Are BMW shares attractive in a downside scenario? In our downside scenario, we
derive a €25 fair value per share. This factors in a prolonged and more pronounced
decline in profitability (€ downside case EPS). Nonetheless, BMW should be able to
master such scenario from a liquidity and B/S standpoint.
Tesla upgrade to Neutral - $420 PT (from $410)
Why do we upgrade? Tesla has currently the best visibility on near-term demand thanks
to the backlog for Model Y (not quantified, but we estimate ~6-9 months) and the
localized Model 3 in China (we estimate ~2 months), even though volumes are still
likely to suffer from the current crisis (Model 3 ex-China and S&X). Tesla's B/S is unlike
peers in debt territory with ~$ net debt and ~$ gross liquidity (year-end
2019 plus rights issue proceeds), but could probably raise equity at lower cost than most
other OEMs if needed. On the back of strong UBS Evidence Lab consumer survey
results, tight cost control and no finco risk, risk/reward looks balanced after a
>50% drop in the share price from peak level. We reiterate our view that Tesla should be
able to defend its technology leadership in EV powertrain, connectivity and autonomy and
rapidly gain market share. Also, we think demand for Tesla's products is not at risk with
oil at $30/bbl because its products are already on sticker price parity vs. equivalent
premium cars (and superior in cost of ownership). For more details, please see our deep-
dive report from January 2020.
What is priced in at current levels? We think shares reflect a 2020 production number
below the guided >500k units, factoring in the shutdown of the Fremont factory. Further
dilution risk from B/S stress, which is not included in our estimates, is not discounted by
consensus. As Tesla's share price is more driven by the long- term perspectives, we focus
on what's discounted with a 2025 view. Our reverse DCF shows that shares discount
~ units sold at ~11% EBIT margin, which is in line with our updated base case.
How have our estimates changed and how do they compare with what's priced
in? We now assume 440k units produced in 2020, instead of 528k before. This factors in
the Fremont shutdown (we have included ~1 month), the slower Shanghai ramp on the
back of capacity / supply chain constraints and weaker S&X demand. Our long-term
earnings and FCF forecasts are almost unchanged. Our new $420 PT (from $410) is
based on a DCF model and updated for the capital increase in February. The reason for
the small increase in the DCF value is the recent $ capital increase that was
accretive to our fair value/share (because it was done at almost double today's share price).
How do we see Tesla in a downside scenario? Even in our downside scenario, Tesla
would technically be fine with its balance sheet, even though staying in a comfortable
liquidity position would increase the dilution risk.
Analyst: Patrick Hummel
Other OEMs
Daimler (Neutral, new €23 PT) scores worse than BMW on most key metrics:
earnings power, cash generation, cost flexibility, balance sheet strength and CO2
compliance. Net liquidity will likely drop below the €10bn stated "comfort zone" in
the next couple of quarters, but € gross liquidity at year-end 2019 should
provide a relatively comfortable buffer. Nonetheless, we think a cancellation of the
FY19 dividend is a potential option. While shares dropped
~55% ytd vs. our EPS cut by 33% (2020E), we think the lower balance sheet quality
and a higher risk of dilution are key reasons to stay on the side line even if the stock
looks very cheap on P/S and P/B. Our new PT is €23, down from
€47, and is based on a blend of SOTP and target PE multiple. The lower PT is
explained by lower earnings and cash flow estimates on the back of the analysis
in this report.
FCA (Neutral, new €6 PT) is amongst the OEMs that could drop into net debt
territory over the next few months, and it is the #1 player in Italy, the EU
country most impacted by COVID-19. Further, we see certain risk to the
proposed merger terms with PSA (the planned € pre-merger special
dividend doesn't seem the right thing to do from a balance sheet point of view).
Despite FCA's challenges in Europe and China (even before coronavirus), the NAFTA
business should remain fundamentally healthy medium-term. Therefore, we stay
Neutral, but monitor the B/S situation and the situation around the merger terms
closely. We have cut our 2020E EPS by 78%. Our new PT is €6, down from €12,
and is based on a DCF. The lower PT is explained by lower earnings and cash
flow estimates on the back of the analysis in this report.
Ford (Downgrade to Neutral, $ PT) had a net cash position at year-end 2019,
but the negative working capital could be a substantial drag to FCF when volumes
shrink. Therefore, we think it is the right decision to run the company in a liquidity
preservation mode, including the announced suspension of the dividend payments.
Ford had $22bn in gross cash and $35bn in total liquidity (incl. credit lines) at
year-end 2019, resulting in a much stronger balance sheet than during the
financial crisis. Also, only 6% of its finco loan book is considered higher-risk.
However, in light of the mixed recent restructuring track record, we think the
risk/reward is less attractive than for GM. Our 2020 base case adj. EBIT is now close
to break-even and F would be loss-making in the downside case (the lower
profitability starting point vs. GM explains why the earnings cut for F is so much
higher – another reason is the GM strike in 2019, leading to a lower base for GM).
We downgrade to Neutral from Buy. Our new PT is $, down from $13, and is
based on target EV/EBITDA (was ) for the auto business to reflect the
limited success of restructuring measures to date and the increased uncertainty
about the turnaround outside the US. F traded at such low multiples also during the
great financial crisis. The lower PT is also explained by lower earnings and cash flow
estimates on the back of the analysis in this report.
GM (Buy, new $27 PT) has a better profitability and cash generation than F on our
new numbers, which factor in a 27% decline on EBIT level (2020E) – we highlight
that GM's 2019 EBIT suffered from a $ strike impact. The balance sheet is
much stronger than before the financial crisis and the cost base much more
flexible. At year-end 2019, GM had $17bn cash and equivalents and $35bn
gross liquidity (cash incl. credit lines). The weak spots are the 24% subprime
exposure of the finco and the negative NWC, which is
Analyst: Patrick Hummel
Analyst: Patrick Hummel
Analyst: Patrick Hummel
Analyst: Patrick Hummel
likely to be a drag to FCF near-term. This is why we think the dividend could be
cancelled and the share buyback is likely to be put on hold near-term. At P/S and
P/B, we keep our Buy rating. Our new PT is $27, down from $47, and is and is
based on target EV/EBITDA 2020E (unchanged) for the auto business. The lower
PT is explained by lower earnings and cash flow estimates on the back of the analysis
in this report.
PSA (Neutral, new €11 PT): The main thing that prevents us from a more positive
view is the lack of visibility on when production will resume in Europe and the
subsequent pricing environment in the region. PSA stands out as the only European
OEM being able to lower its CO2 compliance cost this year. Further, PSA is better
positioned to face another downturn than in 2008 with a strong net cash position that
can digest an outflow from WC near term and a much higher of profitability as a
starting point. We see the auto EBIT margin declining to % this year, above the
>% management guidance over 2019-21. Our change in price target from €20
to €11 (DCF-based) can be mostly explained by our lower earnings estimates (-40/-
50%) and lower net cash forecasts to reflect the anticipated WC swing.
Renault (Neutral, new €16 PT): The operating outlook is bleak: we now expect
the auto EBIT margin to turn negative starting this year and lasting over the next 5
years and the FCF to remain negative for longer. We are not sellers for two keys
reasons: (1) we do not see a break-up of the alliance with a 12- month view and (2)
we think the concerns over the balance sheet liquidity are overdone. The share price
reflects either no value for the core auto business, a sharp discount to the finco BV
(Renault market cap is now below the finco BV) or a further 30% divi cut from
Nissan, scenarios which seem excessive to us. As a consequence of our lower earnings
forecasts for the stub, we reduce our core value (DCF-based) to €0 (our DCF above
shows -€3 but we use €0). Then, we add up the value of the associates using a DDM
(we increase our WACC from 9% to 10% to reflect the higher volatility), which
yields an value/share of €16 (prior €36).
Volkswagen (Buy, new €140 PT) has a stronger B/S and cash generation than
ever, in our view. However, VW also has a higher degree of vertical integration
and a less flexible cost base than peers. Nonetheless, we see VW amongst the best
prepared OEMs to weather the storm (€33bn gross cash excluding credit facilities)
while executing its all-in EV strategy that we still consider the most successful
approach, even at $30/bbl oil. Shares now even trade below the diesel crisis lows,
when VW brand was around break-even and barely any positive FCF except for China
JV dividends. At the current record low P/B of and P/S of , we reiterate VW
as our OEM top pick in Europe. We have cut clean EPS by 49%, broadly in line with
the drop in the share price ytd. Our new PT is €140, down from €220, and is based
on a blend of SOTP and target PE multiple. The lower PT is explained by lower
earnings and cash flow estimates on the back of the analysis in this report.
Analyst: David Lesne
Analyst: David Lesne
Analyst: Patrick Hummel
Changes in UBS global auto sales and production
Our new base case reflects the lockdown in a growing number of countries and the
likely drop in consumer sentiment over the next few months. The estimates include ~1
month of production closure and assume that some lost production can be recovered in H2.
Production is likely to decline more than sales as inventories will get further
reduced, also because OEMs and dealers need to focus on cash.
Figure 4: UBS global car sales model
-9% sales and -10% production in
2020 new base case
Sales, m units) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E
2024E
Western Europe
% growth % % % % % % % % % % % % % % %
of which: Germany
% growth % % % % % % % % % % % % % % %
of which: France
% growth % % % % % % % % % % % % % % %
of which: Italy
% growth % % % % % % % % % % % % % % %
of which: Spain
% growth % % % % % % % % % % % % % % %
of which: UK
% growth % % % % % % % % % % % % % % %
RoWE
% growth % % % % % % % % % % % % % % %
Eastern Europe
% growth % % % % % % % % % % % % % % %
of which: Russia
% growth % % % % % % % % % % % % % % %
Europe
% growth % % % % % % % % % % % % % % %
North America
% growth % % % % % % % % % % % % % % %
of which: USA
% growth % % % % % % % % % % % % % % %
South America
% growth % % % % % % % % % % % % % % %
of which: Brazil
% growth % % % % % % % % % % % % % % %
Asia
% growth % % % % % % % % % % % % % % %
of which: Japan
% growth % % % % % % % % % % % % % % %
of which: China
% growth % % % % % % % % % % % % % % %
of which: India
% growth % % % % % % % % % % % % % % %
of which: South
Korea
% growth % % % % % % % % % % % % % % %
of which: ASEAN
% growth % % % % % % % % % % % % % % %
Other
% growth % % % % % % % % % % % % % % %
ROW
% growth % % % % % % % % % % % % % % %
Total
% growth % % % % % % % % % % % % % % %
Source: UBS estimates
Figure 5: UBS global car production model
(Production, m units) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E
Western Europe
% growth 12% 4% -8% 0% 5% 7% 4% 1% -4% -6% % % % % %
Eastern Europe
% growth 24% 11% 3% 3% 0% -2% 1% 9% 4% 0% % % % % %
Europe
% growth 15% 6% -4% 1% 3% 4% 3% 4% -2% -4% % % % % %
North America
% growth 39% 10% 18% 5% 5% 3% 2% -4% -1% -4% % % % % %
South America
% growth 13% 3% -1% 6% -15% -19% -12% 20% 4% -4% % % % % %
of which: Brazil
% growth 8% 0% 1% 9% -13% -21% -11% 26% 5% 1% % % % % %
Asia
% growth 28% 0% 10% 5% 3% 2% 8% 3% -1% -6% % % % % %
of which: Japan
% growth 21% -13% 18% -3% 2% -5% -6% 5% 0% 0% % % % % %
of which: China
% growth 31% 3% 6% 15% 8% 5% 14% 2% -4% -9% % % % % %
of which: South Korea
% growth 22% 9% -2% -2% 0% 1% -7% 0% -5% -2% % % % % %
of which: India
% growth 32% 11% 5% -7% -2% 6% 10% 6% 7% -11% % % % % %
of which: ASEAN
% growth 48% -4% 43% 2% -8% -2% 3% 0% 8% -4% % % % % %
Other
% growth -92% 336% 13% 157% 29% 65% 181% -6% -19% -16% % % % % %
ROW
% growth 19% 4% -25% -8% 25% 0% 16% 12% 0% -22% % % % % %
Total
% growth % % % % % % % % % % % % % % %
Source: UBS estimates
What are the key assumptions?
Our new forecasts reflect the following key assumptions:
Europe: Lockdown in the largest markets with demand and production
severely impacted in Q2. Political focus in the near-term on providing liquidity to
companies and keep people in their jobs, then followed by auto-specific stimulus
in H2. There might be a skew in stimulus measures in favour of lower- CO2 vehicles,
in order to help OEMs to be CO2-compliant. So far, the EU OEMs have announced
plant shutdowns for the next 2-4 weeks, but even after production is resumed,
utilization is likely to be low initially.
China: February marked the trough in the y/y trend with ~80% and we expect a
gradual recovery from here as China could be "first in, first out" of the
coronavirus crisis. Weekly data and OEM comments point to a decline by ~40- 50%
in March. All major car plants in China are back online by now. Also, we expect
several car specific political stimulus measures to be introduced, as elaborated in
detail by our China auto team. For example, there have already been first headlines
about potentially lifting licence plate caps in some of the largest cities (Bloomberg).
US: Into the crisis with a slight time lag vs. Europe, we expect the situation to
escalate further and peak in the course of Q2. The Detroit-3 have announced
production shutdowns for the next 2 weeks. Any extended shutdown would
represent a downside risk to our Q2 numbers shown in the figure below. In H2, we
expect a normalization as car-specific stimulus could well be on the agenda again,
particularly in light of the presidential elections in November. The "cash
-45% in Q2E, H2 recovery on
likely stimulus
The worst should be behind,
potentially reaching prior year
levels during Q2
-35% in Q2E, stabilization in H2
on potential stimulus
for clunkers" programme introduced during the financial crisis, which
comprised a $ voucher for every new vehicle purchased, proved very
effective to stimulate demand.
The chart below summarizes our latest view on the quarterly trajectory in the key
markets.
Figure 6: Quarterly auto sales forecast in the key markets
27
25
23
21
19
17
15
13
Source: UBS estimates
Figure 7: Implied unit loss in from production halts
announced in Europe and US in % of global production
Figure 8: Global plant disruptions announced so far
0% 1% 2% 3%
Source: UBS estimates, IHS Note: Based on announced shutdown period Source: UBS
BM
W
PSA
Volkswagen
Daimler
%
%
FCA
%
Ford %
Renault alliance
%
Hyundai %
Toyota %
Suzuki %
Honda %
-42%
-10%
10%
8
%
21%
-19%
10%
-10% 6%
-35%
FY Q1 Q2 Q3 Q4 FY FY Q1 Q2 Q3 Q4 FY FY Q1 Q2 Q3 Q4 FY
2019 2020 2020 2020 2020 2020 2019 2020 2020 2020 2020 2020 2019 2020 2020 2020 2020 2020
Europe China US
-45%
M
ill
io
ns
OEM Region Weeks OEM Region Weeks
% Subaru NA 1 VW EU >2
% VW US 2 Daimler EU 2
Toyota NA 2 Audi Hungary na
Bentley UK 4 Volvo Belgium na
Audi Mexico 4 Skoda Czech Rep 2
Tesla US 3 Ford EU na
Renault Morocco na Nissan UK na
Dacia Romania 3 Toyota France na
Toyota EU na RNO France na
Mini UK 4 PSA EU 2
Rolls-Royce UK 4 FCA EU 2
FCA US na Ford Spain 1
GM US na Ferrari Italy 2
Ford US na Seat Spain 6
Honda UK 3 Nissan Spain na
Porsche GER 2 Lambo Italy 2
Mercedes Brazil 4 Volvo US & Sweden 3
4% 5% BMW US 2 Mercedes India 1
JLR UK 3 VW Mexico na
What will we track going forward?
Tracking global production and sales will be the key data to follow to better
understand when a normalization begins. Sales data are available from all the key markets
on a monthly basis shortly after the end of the month. Production data are usually
provided on a quarterly basis, but we expect the OEMs to comment proactively in this
specific situation about any changes (prolonged production downtimes, date to resume
production). We will track this data on a regular basis and intend to provide updates in
our research product.
Production stops/starts and
monthly sales data are key to
follow
Figure 9: Monthly sales trend ytd in Europe Figure 10: Monthly sales trend ytd in China
2,000
1,800
1,600
1,400
1,200
1,000
800
3,000
2,5
2,0
1,5
1,0
5
600
2017 2018 2019 2020
0
2017 2018 2019 2020
Source: National car associations, UBS Source: CADA, CPCA, UBS
What can we learn from previous recessions?
The 9% drop in demand in 2020 would be one of the most severe in automotive history.
During the financial crisis, auto demand ex-China dropped by 17% cumulatively
over the period 2007-09. Including China, car sales declined by 8% over the same period.
This time, China is unlikely to provide an offset to the global picture, even though it is
likely the first car market normalizing based on national coronavirus curves. Another
comparison to a past event: The sovereign debt crisis in southern Europe caused a decline in
European car sales by 6% in 2012.
~17% decline ex-China during
financial crisis (peak to trough)
-8% -
7%
00
00
00
-20%
00
00
-82%
Th
ou
sa
nd
s
Th
ou
sa
nd
s
Figure 11: Long-term trend in car sales in the key markets (m units)
30
25
20
15
10
5
0
Europe North America South America China
Source: IHS, UBS
What's different to 2008 and what's similar?
Similarities between now and the 2008/09 financial crisis:
A significant decline in demand
Growing concerns about balance sheet stability / rising risk of bankruptcies in the
automotive supply chain
Lower-quality auto credit is a key concern in the US market (rising default risk)
Differences between now and the 2008/09 financial crisis:
Demand shock expected to steeper this time, but could also recover faster
Balance sheets are much more stable (better capitalization and higher liquidity).
Particularly US OEMs were highly indebted before the 2008 financial crisis.
Cost structures are overall more flexible and break-even points (as a function of
volume) have been reduced by the OEMs
Risk of disruption didn't exist back in 2008/09 (EV, AV)
Balance sheet health check
Most OEMs currently have a net cash position, and the net liquidity buffer is
substantially higher than during the financial crisis. This holds true across the board,
but particularly for the US OEMs.
Overall, balance sheets are in
better shape than in 2008/09
28 28
24
23
21 21
21
21
18
19 19
18
21
18
19
20 19 20
18 18 19
17
18
17
15
14
5
7
5 6
6 6 5
4 4 5 5
3 3
4444
China: +63%
8
Financial crisis:
2009 vs. 2007
EU: -17%
22
21
18
19
16 13
US: -33% 13
9
27
25
21 21 21
21 21 20
62% 50%
20%
1
1
4
%
9
%
8
%
1
%-
4%
%
-14%
-
9%
2
%
5
%3
%
4
%
6
1%
17
%
18
%
1
%
4%
0%
Figure 12: Net industrial financial position in billions (lc) and % of revenues 2019 vs. 2009 (ex finco)
25
20
15
10
5
-
-5
-10
-15
-18%
-24%
-20%
-17%
-28%
BMW DAI FCA PSA RNO VW Tesla Ford GM Maruti Tata Hyundai Kia
Ind. net cash/(debt) 2009 Ind. net cash/(debt) 2019 Ind. net cash/(debt) 2009 in % of sales Ind. net cash/(debt) 2019 in % of sales
Source: Company information Note: Excluding auto financing arms
But on our lower earnings forecasts, cash flows are coming under pressure and working
capital can be a key swing factor. This is particularly a risk for the OEMs with a negative
net working capital position, such as the US names incl. FCA and the French OEMs. For
them, a shrinking top line leads to cash outflows. The German OEMs, on the
contrary, have a positive net working capital and a shrinking top line can be a source
of cash, for as long as inventory is aligned with demand in a timely manner and receivables
can be collected on time.
Figure 13: Net working capital / sales (2019)
US and French OEMs could face
outflows from a swing in working
capital
20%
15%
16% 16%
10%
8
%
5%
7%
6%
4%
0%
-5%
-10% -8%
-9%
-5%
-4% -
3%
0%
-6%
-15%
BMW DAI FCA PSA RNO VW Tesla Ford GM Maruti Tata HMC Kia
Source: Company information, UBS
We consider a net cash position of ~5% of revenues as most likely sufficient for our
base case scenario and ~10% of revenues represent the threshold for the "comfort
zone".
We see BMW and VW as OEMs with the strongest balance sheet, followed by PSA
(even though PSA has a higher working capital risk)
Tesla is the only OEM with a net debt position but even in the current situation
probably has better equity market access than legacy OEMs
FCA and PSA plan to pay high dividends before the merger. Particularly FCA's
planned € special dividend seems now difficult to justify from a B/S
viewpoint as the company would drop into net debt territory. As a
consequence, we believe the overall merger terms may have to be reviewed.
Our analysis does not factor in the B/S of the finco arms, which are typically
financed externally via asset backed securities, corporate bonds and even retail savings
accounts. Needless to say that OEM parent companies would have to inject equity in
case residual values of financed/leased cars drop sharply and/or if the auto credit
market dries up. Such scenario is not included in our new base case, and we look at
it separately in this report.
Why are we confident in auto-specific stimulus?
While the near-term political focus is likely generally on providing liquidity to
struggling industries and supporting employment, we believe that auto demand stimulus
will be high up on the political agenda later this year as the pandemic situation
normalises. The steeper the drop near-term, the more decisive the measures are
likely to be. But why are we so confident "cash for clunkers" programmes can be a
key instrument?
It has happened before during the financial crisis, as shown in the figure below.
The multiplier effects are large. For a relatively small amount equivalent to ~10- 20%
of the vehicle's price, consumers are incentivised to engage in the second largest
purchase a private household typically does (except for buying a home).
The impact on local job creation in the largest economies is high as Europe, US and
China have a strong automotive manufacturing base, including indirect jobs
(industrials, chemicals etc.)
Governments could "kill two birds with one stone" by providing higher
incentives for low-emission vehicles and hereby help OEMs to be compliant with
CO2 targets. This is particularly relevant in the EU.
BMW and VW have the strongest
balance sheet, in our view
We view FCA's special dividend
ahead of the planned merger is an
issue
Biggest bang for the buck for
governments to drive consumer
spending and save industrial jobs
Figure 14: Auto-specific stimulus during the financial crisis
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
China: Rural purchase subsidy
introduced:
Rmb3-5k per unit to rural residents
who scrap their vehicles
Europe: "Abwrackprämie" in
Germany introduced:
€ per vehicle scrapped
USA: Car Allowance Rebate
System:
Incentives of between $ to US
residents trading in
Europe Greater China Japan/Korea North America South America Global
Source: UBS
We would expect the focus to be on car scrappage incentives. But there might be
increased purchase incentives for buying a low-emission vehicle, even though an
exclusive focus just on EVs is unlikely, in our view. In the EU, we would expect any
stimulus to be designed to help OEMs with their CO2 compliance targets at lower cost.
This seems much more likely to us than a postponement of CO2 targets.
What could be a worst-case scenario?
Taking the cumulative decline of 17% in global car sales ex-China during the years 2007-
09 as the benchmark and assuming China would decline simultaneously this time, we
consider a ~17% decline in global car sales a worst-case scenario. Such scenario would
factor in a global recession with a relatively slow recovery in the course of 2021.
What's the impact of such scenario on our global OEM coverage? The worst-case scenario
would reduce the top line by another 9% vs. our new base case. On average, we
assume OEMs have ~30% operating leverage. Additionally, we highlight the size of
the OEM Finco book relative to the peer group, which could bear additional risk if
funding dries up and residual values of used cars come under additional pressure. The
financial impact is summarized in the table below.
Two birds with one stone?
17% global production decline,
~30% leverage and finco write-
downs on top
30 143%
149%
14
12
22
10
17 16
13 66 69 69
%
14 80% 80
55
60
37 6 40
3
- - - 12
%
2 17% 20
0% 0% 0% 0%
%
%
%
%
Figure 15: Downside case EBIT by company 2020E (lc) Figure 16: Downside case EPS by company (lc)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
5,385
4,641
3,298
3,036
3,852
750
12,860
5,763
1,241 1,030
6,280
3,566
447 771 2,366
0
-2,000
-4,000
-565
348
-1,850
Base case EBIT Downside case EBIT
Base case EPS Downside case EPS
Source: UBS estimates Source: UBS estimates
Figure 17: Finco book value in bn 2020E in comparison to Finco book value in % of market cap
35 33
30
25
20
15
10
5
0
Tesla Maruti Kia Tata FCA PSA GM BMW VW DAI Ford RNO HMC
Finco book value LC (bn) 2020E Finco book value in % of market cap
160%
0%
0%
0%
%
%
%
%
Source: UBS estimates
The Finco can be a source of downside risk to FCF and asset write-downs, driven by a
deteriorating used car market (residuals falling) and rising credit default risk. In the peer
group, GM has the highest share of subprime lending (~24% of the loan/leasing book).
As fincos are typically run with a ~8-10x gearing (similar to a retail bank), a ~10-12%
asset impairment across the board (loans and vehicles) would eliminate the entire finco
equity. This sounds dramatic, but hasn't even happened during the financial crisis. Figure
19 shows the losses of the OEM fincos during the financial crisis. It can be seen that with
the exception of the US OEMs, the trough was around break-even level incl. the write-
downs.
Fincos are typically run with 8-10x
leverage
Figure 18: Sensitivity: Finco equity book write-down as
percentage of market cap by OEM
Figure 19: Finco losses during GFC – EU OEMs mastered
the situation relatively well
4,000
3,000
2,000
1,000
-
(1,000)
(2,000)
(3,000)
3,003
(4,000)
(5,000)
BMW DAI FCA RNO PSA VW Ford GM
2007 2008 2009 2010
Source: Company information, UBS estimates Source: Company information, UBS
Taking a closer look at the industrial balance sheet ex-finco. We take the base-case net
liquidity 2020E and adjust it for the additional drop in earnings. Further, we assume
half of the net working capital for the OEMs with a negative NWC swings back. This is a
key risk for the FCA, GM and Ford and to a lesser extent, for the French OEMs. In this
scenario, FCA, GM, Ford and Renault would quickly drop in net debt territory.
Figure 20: Net financial position – 2020E downside case vs. 2019 actual
Liquidity vs. downside case FCF
and short-term debt maturity
25,000
20,000
15,000
10,000
5,000
0
(5,000)
(10,000)
(15,000)
17,577
14,340
10,997
7,106
3,985
-10,804
7,914
1,013
1,734
-4,186
21,276
18,290
-4,974*
-5,874*
6,529
-4,454
5,082
-3,005
Downside net cash (debt) incl. swing in NWC Ind. net cash/(debt) 2019
Source: Company information, UBS estimates Note: Tesla includes capital increase proceeds.
We also look at available gross liquidity and compare it to the downside case FCF and the
short-term debt maturities (ex finco). The larger the difference between the left and
right column for each company in the figure below, the more comfortable the
liquidity situation should be.
1,201 1,224
717 630 831
278 188 472
703 608 507
957 952
-572
Tata FCA PSA BMW VW DAI Ford RNO HMC
10
%
15
%
20
%
25
%
30
%
1% 2% 3%
2% 3% 5%
6% 7% 7% 8% 13% 15%
9% 10% 10% 12% 20% 22%
2% 3%
3% 4%
3% 5%
7%
8%
10%
12% 13% 13% 17% 27% 30%
16% 16% 17% 21% 33% 37%
19% 20% 20% 25% 40% 45%
Figure 21: Gross liquidity vs. 2020E downside FCF and non-finco short term debt
40
30
20
10
0
-10
-
-20
Tata Tesla RNO BM
W
FCA GM Hyundai PSA Ford DAI VW
Gross liquidity 2019 Downside FCF 2020E Ind. Short term debt
Source: Company data, UBS estimates
What's currently priced in?
Auto stocks fell 65% during the financial crisis…
OEM stocks have fallen -47% year-to-date, in comparison to SXAP declining by - 65%
peak-to-trough during the financial crisis. It took 16 months back then to reach the
trough. As things are unfolding even faster currently, the trough also might be reached
sooner. How does the drop in the share prices compare to our revised earnings
expectations?
Figure 22: SXAP long-term trend – 2020 ytd drop -47% vs. GFC drop of -65%
700
600
500
400
300
200
430
SXAP during
GFC: -65%
SXAP during
Coronavirus: -47%
519
272
100
0
Source: Bloomberg
T
ho
us
an
ds
…while earnings fell by ~50-60% on average
Shares have declined broadly as much ytd as we expect EBIT to fall this year on average.
We're careful to interpret this move as predominantly a reflection of the lower near-term
earnings outlook because (1) this year's steep short-term trough is a consequence of an
external shock and therefore should normalize in the years after (of course it can be
debated what "normalization" means and how quickly it happens) and (2) the share
price reaction also needs to be seen against the backdrop of cash flow and balance
sheet concerns. We therefore refrain from making a judgement on what's priced in from
an EBIT or EPS perspective.
On a company level, our new base case EBIT for 2020 is now ~40-90% below our forecast
at the beginning of the year. The following chart compares the share price moves ytd with
the EBIT revisions.
Figure 23: UBS EBIT revisions ytd (2020E) vs. share performance ytd by company
DAI PSA Tesla VW BMW FCA RNO GM Ford
-50%
Source: UBS, Datastream
Price/sales and price/book ratio now below 2008/09
P/S and P/B can be a good way to gauge where valuation currently is compared to the
financial crisis years. Both multiples have reached all-time lows. Compared to the average
for SXAP, we are now ~50% below. Of course, the fall in P/S and P/B also reflects the
expected decline in profitability and the risen concerns about liquidity. Earnings
multiples, in our view, are not helpful in this context because they typically reach very
high levels close to the trough in the share prices. Back in 2008/09, when production fell
~17% globally ex-China, the P/S and P/B discount vs. long-term average reached ~40%.
Hence, we believe shares currently price a decline in global car sales by ~15%. This is
broadly in line with our downside case scenario of -17%. Given that P/B and P/S were
already below average before the coronavirus crisis (reflecting tech disruption risk,
which didn't exist back in 2008/09), we think the market doesn't factor in a full
global financial crisis scenario yet.
P/B and P/S are at all-time lows,
about ~50% below mid-cycle
0%
-10% -14%
-20% -39% -40% -45% -47% -49%
-30% -56% -62% -65%
-40%
-90%
-60%
-70%
-80%
-55% -55% -51%
-46%
-54%
-64%
-54% -52%
-90%
-100%
2020 earnings rev isions ( UBS) YTD performance
Figure 24: SXAP P/S long-term trend Figure 25: SXAP P/B long-term trend
Source: Datastream, UBS Source: Datastream, UBS
Figure 26: P/S and P/B by OEM today (2020E) vs. LT average and vs. 2008/09
P/B P/S P/B P/S P/B P/S P/B P/S P/B P/S P/B P/S P/B P/S P/B P/S P/B P/S
BMW Daimler FCA RNO PSA VW TSLA GM Ford
August 2009 (GFC) March 2019 (Corona-crisis)
Source: Datastream, UBS
Market cap below net cash and book value of finco
On a company level, the market cap of the German OEMs, Renault and Ford has dropped
below the net cash level and the book value of their finco. We believe this signals that a
liquidity crisis scenario is started to be priced in. However, based on our analysis above,
the German OEMs would not face liquidity issues in our new base case scenario, and
even the downside-case scenario seems doable, particularly for BMW and VW. The
ratio looks relatively robust for BMW, who also has one of the strongest balance sheets,
in our view. BMW has the best credit rating amongst EU OEMs, globally only second to
Toyota.
-3x
Figure 27: Net liquidity + Finco BV in % of market cap
200% 181%
150%
100%
50%
0%
-50%
-11%
Tesla Maruti FCA GM VW DAI Ford PSA BMW RNO
Source: Company information, UBS
Summing up, we believe the current share prices reflect a scenario that is broadly in line
with our downside case but worse than our base case. Is there a risk things turn out to be
even more negative than in our downside case scenario? Yes, if production shutdowns
continue well into H2, we could possibly see additional negative cascading effects
resulting in a potential need for recapitalization (extended period of cash burn in
automotive business, major write-downs on loan books and leasing books).
In the following, we summarize the upside/downside fair values per share and EPS. We
have added a short summary of the upside case. The base and downside case is described
and analysed in detail throughout this report. As a top-down assumption, we use -
3% global auto sales in 2020 and positive +5% in 2021.
Figure 28: Upside and downside scenario overview
The downside case is almost fully
priced in, but we can't see with
certainty that it won't be even worse
this time
Price Target EPS Upside case description
Base Upside Downside Upside Downside
BMW 53 70 25 Return to 6% auto EBIT margin in, stable pricing
DAI 23 40 13 4% MCG margin, 5% truck margin, stable pricing
VW 140 200 60 6% group OP margin, stable pricing
Tesla 420 750 200 8% EBIT margin, >500k volume guidance met
FCA 6 11 3 6% NA margin, break-even in Europe and Asia
Ford 4 9 2 - 6% NA margin, stable no widening of losses in EU and China
GM 27 45 15 8% NA margin, no widening of losses in China
RNO 16 28 7 - Renault core OP margin of 2%
PSA 11 26 6 Flat 2020 auto sales on sharp H2 recovery, auto EBIT margin at 8% in '20
Tata 130 265 45 - Sufficient balance sheet reserves, recovery in sales in H2
Hyundai 100,000 117,000 57,000 18,024 5,303 -3% volume amid recovery in Korea (Q2). 20bps higher OPM vs. base case
Kia 31,000 37,000 17,000 5,663 1,012 Volume downside protected (+%) amid recovery in Korea & India expansion
Source: UBS estimates
113% 115% 116%
125%
136%
100%
76
%59
%
28
%
Appendix - valuation snapshots
Our price target for BMW is based on a blend of a DCF (€71 fair value per share) and
7x PE (€34 per share).
Figure 29: BMW DCF valuation (€m)
Year of assessment 2020 2021 2022 2023 2024
2019
Net income to shareholders 3,460 4,751 5,295 5,626 5,665
add back: D&A 6,335 6,515 6,559 6,644 6,818
less: investments -7,187 -7,010 -7,104 -7,074 -7,180
less: change in net working capital -365 1,051 -324 104 -157
Other adjustments (mainly Finco) -1,159 -1,491 -1,587 -1,638 -1,678
Free cash flow to shareholders 1,083 3,817 2,840 3,661 3,469
Terminal value (% t-growth) - - - - 34,860
Cost of equity
%
NPV - planning years 10,772
NPV - terminal value 21,160
Book value Finco 14,674
Fair equity value 46,606
Fair value per share 71
Source: UBS estimates
Our price target for Ford is based on 2x EV/EBITDA for the autos division and P/B,
reflecting concerns that ROE could be below COE in the finco near term.
Figure 30: Ford valuation ($m)
2020E
Auto Sales 127,993
EBITDA 6,680
EBITDA w/JV 5,900
Multiple
Auto Enterprise Value 11,800
Cash 22,288
Ford Credit ( P/B) 6,600
NOLs 0
Debt -15,759
Pension (Post tax) -7,500
Net Cash (Liability) 5,629
Equity Value 17,429
Total Shares 4,013
UBS Price Target $
Source: UBS estimates
Our price target for Tesla is based on a DCF model.
Figure 31: Tesla DCF valuation ($m)
Year of assessment 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2020
Net income to shareholders 2,175 3,718 4,963 5,731 6,418
add back: D&A 2,339 2,591 2,356 2,518 2,882
less: investments -2,700 -2,909 -3,128 -3,250 -3,248
less: change in net working capital -504 -494 -419 -405 -358
Leasing, other adjustments -150 -227 -275 -323 -367
Free cash flow to shareholders (incl. stock based compensatio 1,159 2,678 3,497 4,270 5,326 6,038 6,631 7,215 7,702 8,142
Terminal value (% t-growth) - - - - - - - - - 104,981
Cost of equity
%
NPV - planning years 28,002 36% Sales growth 11% 10% 8% 7% 5% 4%
NPV - terminal value 38,856 51% Sales 71,965 79,449 86,123 92,496 97,491 101,781
AV option value (not included in above) 10,000 13% Cash convers % % % % % %
Fair equity value 76,858 100% FCF to shareh 5,326 6,038 6,631 7,215 7,702 8,142
Fair value per share 418
Source: UBS estimates
Valuation Method and Risk Statement
Risks in the auto sector include, but are not limited to: (1) Commodities: Oil and raw
material prices; (2) interest rates; (3) overall macro growth and consumer sentiment;
(4) currency fluctuations; (5) new entrants in the OEM space (Silicon Valley players,
ride-on-demand services).
Required Disclosures
This report has been prepared by UBS Europe SE, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to
herein as UBS.
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(or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 24 March 2020 04:11 AM
GMT. UBS has designated certain Research department members as Derivatives Research Analysts where those department members
publish research principally on the analysis of the price or market for a derivative, and provide information reasonably sufficient
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UBS Investment Research: Global Equity Rating Definitions
12-Month Rating Definition Coverage1 IB Services2
Buy FSR is > 6% above the MRA. 44% 32%
Neutral FSR is between -6% and 6% of the MRA. 41% 29%
Sell FSR is > 6% below the MRA. 15% 20%
Short-Term Rating Definition Coverage3 IB Services4
Buy
Stock price expected to rise within three months from the time the
rating was assigned because of a specific catalyst or event. <1% <1%
Sell
Stock price expected to fall within three months from the time the
rating was assigned because of a specific catalyst or event.
<1% <1%
Source: UBS. Rating allocations are as of 31 December 2019.
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the
past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the
past 12 months.
KEY DEFINITIONS:Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield
over the next 12 months. In some cases, this yield may be based on accrued dividends. Market Return Assumption (MRA) is
defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under
Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible
change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect
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EXCEPTIONS AND SPECIAL CASES:UK and European Investment Fund ratings and definitions are: Buy: Positive on
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Company Disclosures
Company Name Reuters 12-month rating Short-term rating Price Price date
BMW7, 18 Neutral N/A € 23 Mar 2020
Daimler7, 18 Neutral N/A € 23 Mar 2020
FCA3, 7, 13, 16, 18 Neutral N/A € 23 Mar 2020
Ford Motor , 16, 20 Buy (CBE) N/A US$ 23 Mar 2020
General Motors Company7, 16, 20 Buy (CBE) N/A US$ 23 Mar 2020
Hyundai Motor4, 12 Buy N/A Won68,900 23 Mar 2020
Kia Motors Buy N/A Won21,500 23 Mar 2020
Nissan Motor Buy N/A ¥ 23 Mar 2020
PSA Group2, 3, 13, 18, 28 Neutral N/A € 23 Mar 2020
Renault7, 13, 18 Neutral N/A € 23 Mar 2020
Tata Motors7, 13, 16 Buy N/A 23 Mar 2020
Tesla, , 16, 20, 22 Sell (CBE) N/A US$ 23 Mar 2020
Toyota Motor7, 16 Neutral N/A ¥6,172 23 Mar 2020
Volkswagen7, 13, 18 Buy N/A € 23 Mar 2020
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date
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of this company/entity or one of its affiliates within the past 12 months.
3. UBS AG, London Branch is acting as co-advisor to Fiat Chrysler Automobiles NV on its announced merger with Peugeot
SA
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