Fitch Ratings expect limited rating movement for the automotive manufacturers in 2020 as most entities in their portfolio are on a stable outlook. However Fitch have a Negative Outlook on Tata Motors Limited (TML, BB-/Negative) due to rising business risks in both its Indian operations and fully owned UK subsidiary Jaguar Land Rover plc (JLR, BB-/Negative). The portfolio is largely investment grade, with all ratings but TML in the high ‘BBB’ or ‘A’ categories.
Crux of the Matter
Regarding 2020 Outlook for the Asia-Pacific Automotive Manufacturers, Fitch Ratings expects weaker global demand and rising investment to continue to put pressure on Asia-Pacific (APAC) automotive manufacturers’ profitability and cash flow generation in 2020.
Sales in the US and Europe are likely to post negative growth, but it is expected that Chinese sales would recover modestly after two consecutive years of decline.
Automakers are also accelerating investments in clean-energy vehicles, new technology and mobility trends.
Lingering uncertainties over trade issues, such as US-China tensions and potential US tariffs on car imports, are factors to watch. However, Fitch’s stable outlook on the automobile sector takes into consideration the robust financial profiles of major automakers, which should provide a sufficient buffer and flexibility to cope with those challenges.
Curiopedia
Fitch Ratings Inc. is an American credit rating agency and is one of the “Big Three credit rating agencies”, the other two being Moody’s and Standard & Poor’s. It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975. Fitch Ratings is dual headquartered in New York and London. Hearst owns 100 percent of the company following its acquisition of an additional 20 percent for $2.8 billion on April 12, 2018. More Info
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