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Gathering Threats Stir Doubts About Auto Sector

Posted March 06, 2019

Under Economic Issues, International Trade Issues

(Sam Goldfarb – Wall Street Journal)

In the current period of modest but steady global growth, financial distress has tended to concentrate in two sectors: retail and energy. Now investors and analysts are growing more concerned that the global auto industry could join that group.

In a recent survey of restructuring experts by the global consulting firm AlixPartners, about one-third of respondents named autos as one of the three sectors most likely to face distress in 2019, nearly five times the share in the previous year’s survey. Retail and energy were the only sectors named by more respondents.

As it stands, only a handful of major auto companies, such as Tata Motors Ltd.’s Jaguar Land Rover and car-seat manufacturer Adient Ltd., have debt trading at levels that suggest meaningful financial risk. But the fear is that those numbers could grow as the industry faces a brewing storm of cyclical and structural difficulties – ranging from a near-term decline in auto sales to the long-term threats posed by climate regulations and ride-share companies. Click here to read more.