LIVE MARKETS-EU's Christmas gift to the auto sector disappoints

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EU'S CHRISTMAS GIFT TO THE AUTO SECTOR DISAPPOINTS

December is a time for giving.

The European Commission, being in a giving mood, announced new measures on Tuesday aimed at easing pressure on its embattled car manufacturers, including the reversal of an effective ban on new internal combustion engine cars.

While the plan was mostly welcomed by auto sector .SXAP stocks, analysts believe the package will unlikely be a game changer for a sector that has struggled for the last two years due to rising competition from China, slowing demand and unfavourable U.S. trade policy.

Here's UBS analyst Patrick Hummel:

"The new package is a moderate relief vs. status quo, but could be seen as disappointment vs. elevated market expectations."

"Most of the content has financial relevance only from 2030 onwards; therefore the near-term earnings impact is very limited."

And Citi's Harald Hendrikse:

"Whilst we see any change to the EU regulations as a positive, it also seems clear that the EU maintains its environmental agenda at the cost of EU auto industry competitiveness and automotive jobs".

"With many investors already viewing the EU auto industry as 'uninvestable' relative to US and China OEM peers, we think these EU changes will not alter that conclusion."

(Samuel Indyk)

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