LIVE MARKETS-EU carmakers face 'scary' China export acceleration

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EU CARMAKERS FACE 'SCARY' CHINA EXPORT ACCELERATION

Morgan Stanley says the risk-reward profile of European carmakers is improving after big underperformance, but pressure from China is worsening, especially for volume players.

The U.S. bank argues China’s domestic market is no longer growing, and that's pushing local champions to export aggressively in a trend it says is “far from being over”.

“The 'scary' acceleration in China auto exports brings a scale that allows for a jump in China OEMs' investments in retail and industrial capacity in overseas markets,” write MS analysts led by Javier Martinez de Olcoz Cerdan on Tuesday.

Premium brands such as BMW BMWG.DE and Mercedes-Benz MBGn.DE are seen as more insulated, while volume players face structural headwinds as Chinese rivals gain local scale in Europe and the rest of the world.

Morgan Stanley says current consensus is in denial about this trend and sees analysts’ expectations moving lower this year. "We... are now far below consensus,” they say.

(Danilo Masoni)

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