UniCredit's 13th Automotive Credit Conference - the OEM (Original Equipment Manufacturer) and automotive supplier conference exclusively focusing on debt capital markets - took place on 22 - 23 June 2022. The conference brought together a huge range of industry experts, issuers and investors. Issuers conveyed their corporate as well as funding strategy providing the investors an excellent opportunity to gain a better information base as to the implications on their investments.
The annual must-attend event provided a broad and diversified sector insight and a deep-dive into the current and upcoming challenges for the sector. Alongside company presentations and One-on-One Meetings this year's conference featured also inspiring speeches and meetings with a broad range of distinguished speakers. Kearney and S&P provided a holistic industry view while Moody's shared their insight on how ESG are reflected in credit ratings.
Some of the key messages of the 2-day-conference were:
- The earnings environment in the sector continues to be characterized by an exceptional degree of uncertainty and volatility not only due to the impact the Russia-Ukraine conflict is having on supply chains and the availability and development of prices for energy and raw materials but also given the continuing bottlenecks in the supply of semiconductors and other industrial products, coupled with significant inflationary pressure and rising interest rates.
- The positive rating momentum in the sector has faded recently, according to S&P, also as growth expectations for global light vehicle sales and production for 2022 have been lowered since FY21 results were released, but they still assume higher growth rates for 2H22 compared to 1H22.
- Available liquidity and debt maturity profiles remain solid for the time being despite sector bond issuance having been significantly lower so far in 2022 compared to the same period last year.
- ESG considerations are increasingly being reflected in credit ratings and the sector's product portfolio continues to be repositioned towards the energy transition and has led to increased sustainable finance activities.
For the fast changing and evolving sector, "communication" plays a pivotal role and there has never been a more important time to bring issuers and investors together. Clear companies' strategies, future targets and challenges, as well as a dedicated ESG action plan amongst others are topics which require a high degree of transparency. Strong content to be credible and convincing are crucial.
At UniCredit we are cognisant of this need and have bundled top quality expertise into a new Advisory unit to further expand UniCredit business proposition via value-added contents on most relevant topics within the industry transformation - like electrification, autonomous driving - but also on supply chain issues and financing of larger capex - especially for the creation of the European battery cell industry.
Over the last months we have recorded a higher demand for these services and we have supported OEMs as well as suppliers in our core geographies in Europe. Looking ahead we expect even more focus partially driven by the challenging economic environment but also by the recently proposed ban of ICE powered cars by the EU Commission from 2035 that will likely speed up the industry transformation further.
We expect the Automotive sector to remain as dynamic and challenging as in the past and we at UniCredit are proud to be one of the key contributors to the sector, acting as strategic partner and advisor to our clients, helping communities to progress.