Global Autos 2022 Outlook: Fundamentals

Oluwapelumi A. Shoyoye
Jim Williamson
Brian Studioso
Matt Zloto

EXECUTIVE SUMMARY
  • Following the COVID-driven downturn in 2020, the global automotive sector was forced to navigate a second crisis in as many years with the semi-conductor shortage plaguing industry production. The component shortage is expected to continue in 2022, pushing any return to “normalcy” out by around 12 months.
  • Component shortages aside, inflationary cost pressures are becoming increasingly evident and will remain a key element of the automotive narrative throughout 2022. Labor, logistics and energy prices remain an increasingly important part of the cost control picture, likely serving as notable headwinds for Automakers and Suppliers alike for at least the first half of 2022.
  • Electrification should continue to gain more prominence in 2022 globally as several OEMs continue to roll out a slew of flagship electrified family launches. Due to the increased need for electrified products, suppliers will look to further fortify competitive positioning through both internal and external investment with hopes to align with sector megatrends.
  • We conclude Part I of our 2022 fundamentals outlook with our issuance expectations for the coming year. IG and HY issuance activity will likely be more muted relative to the past two years, reflecting favorable maturity schedules and minimal need for additional capital. That said, captive financing requirements for IG OEMs will continue to dominate the market, while IG suppliers may be more active market participants in pursuit of growing electrification platforms though M&A.
RELATIVE VALUE

Risks and Catalysts

We present Part I of our 2022 Global Autos Outlook with a look into industry fundamentals including a 2021 overview, as well as key themes we will pay close attention to going forward through the coming year. In addition to our industry overview, in which we provide our broad level sector thoughts that help shape our credit view across the sector, Part II of our outlook will include a discussion on relative value.

From an operational perspective, the emergence of the latest wave of COVID infections from the Omicron variant remains a clear risk and has the ability to further disrupt the trajectory of the recovery. On the one hand, the latest round of consumer restrictions are already being put into effect, especially across Europe, which will place renewed pressure on consumer mobility and likely footfall through dealerships over the near term. On the other hand, while it is

INDUSTRIALS
Global Autos 2022 Outlook: Fundamentals

Oluwapelumi A. Shoyoye
Jim Williamson
Brian Studioso
Matt Zloto

Global Autos

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