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.
