J.P. 摩根-美股-汽车与汽车零部件行业-2019摩根大通汽车行业会议要点-2019.8.19-37页.pdf

North America Corporate Research19 August 2019 Takeaways from the 2019 J.P.Morgan Automotive ConferenceChina Expectations Now Reflect Reality;Industry Prepared in Event of US Downturn(But None Seen Imminent)Autos&Auto PartsRyan Brinkman AC(1-212)622-Bloomberg JPMA BRINKMAN Rajat Gupta AC(1-212)622-Bloomberg JPMA GUPTAR Daniel J Won(1-212)622-US Autos Credit ResearchJonathan Rau,CFA AC(1-212)834-Avi Steiner,CFA AC(1-212)270-J.P.Morgan Securities LLCSee page 34 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment This note discusses comments from many of the firms whose senior managements presented on Day 1 and Day 2 of the recent 2019 J.P.Morgan Automotive Conference in New York,including automakers General Motors(GM),Ford Motor Company(F),and Tesla(TSLA).We also heard from auto parts suppliers Adient(ADNT),American Axle(AXL),Aptiv(APTV),Cooper Tire&Rubber(CTB),Dana(DAN),Gentex(GNTX),Gentherm(THRM),Magna International(MGA),Tenneco(TEN),and Visteon(VC),as well as auto dealers AutoNation(AN),Asbury Automotive Group(ABG),and Penske Automotive Group(PAG),and from KAR Auction Services(KAR).This note also contains takeaways from our annual dinner with IHS Automotive and comments from J.P.Morgans credit research analysts hosting ofGM Financial and a ratings agency panel featuring analysts from Moodys,S&P,and Fitch Ratings.We also heard from a number of others at the conference,including:Chase Auto Finance;Cooper Standard;Experian Automotive;NXP Semiconductors;Shiloh Industries;Superior Industries;Iochpe-Maxion and Veoneer.Finally,the conference featured presentations from 11 privately-held high growth high technology companies that participated in our third annual“Private Company Forum at the J.P.Morgan Automotive Conference”,including:Arbe Robotics;Automobili Pininfarina;Autotalks;AutoX;Gett;Innoviz;Nexar;Otonomo;Quanergy StoreDot;and Yoshi.Outlook for light vehicle sales and production in China “Long-term constructive,short-term watching”:Nearly all conference participants expressed continued optimism surrounding the long-term potential for the market in China,although few called for any improvement near-term,citing low visibility which has likely been decreased further by potential overhang from the recent transition from China 5 to China 6 emissions(which may have temporarily boosted sales while exacerbating pricing headwinds).At least,some pointed out,inventories do not appear as elevated as before,helping to contribute to the overall sense that while there does not yet seem to be sufficient evidence to hold out hope for near-term sequential improvement,at least the degree of deceleration is not likely to continue to materially surprise to the downside as has been the case for nearly a year.General Motors(GM,OW)Still confident on Cruise positioning amidst commercial launch timing change;Important full-size truck launch paying dividends;Transformational cost saving plan on track with saves still thought net,not gross;Prepared for US downturn although none seen imminent.We hosted GM Chief Financial Officer Dhivya Suryadevara who updated investors on GMs thoughts on the China market(“long-term constructive,short-term watching”),GMs relative positioning within China(strong,given plethora of new launches in 2019 heavily weighted toward the back half,and given luxury continues to outperform the mass-market and Cadillac continues to outperform luxury),the ongoing full-size truck platform roll-out(media/investor fears of market share loss are overblown,as GM is gaining share in variants for which inventories have reached full availability),the transformational cost savings plan(targeted savings are on track and GM continues to see these savings as net as opposed to gross),and potential for normalized FCF(likely to track toward 100%net income to EBITDA conversion,up from 50%today)and GMNA margin(actions provide upward pressure to GMs targeted 10%level).2North America Corporate Research19 August 2019Ryan Brinkman(1-212)622- Ford Motor Company(F,NR)1H19 Underlying North America profit better than looks,given Explorer launch;Completely confident in move away from passenger sedans in US;Truck franchise has held up well in face of increased competition and is about to fire back:We hosted Ford President of North America Kumar Galhotra who updated investors on the firms recent launch of an all-new Explorer(2H North America profits will benefit from full availability of this model and relative to 1H19 the non-repeat of potentially underappreciated headwind due to lost production associated with changeover to the new model),the firms decision last year to cease offering any passenger sedan in the US market or,indeed,passenger car apart from the Mustang(Ford remains very confident in this decision,including because it believes the consumers move away from this product category is structural in nature and because it allows Ford to re-invest product development dollars toward higher return categories such as utilities and toward electrification),and the firms pickup truck franchise(Ford has not lost sales and has actually increased average transaction prices in the face of all-new heavy-duty and light-duty competition from RAM and light-duty competition from General Motors likely helped by its very high customer loyalty for this product and is about to fire back with an all-new Super Duty just as GM launches its own new heavy-duties).Tesla(TSLA,UW)Pushing back on fears of increased competition;China plant timing appears on track with guidance/ahead of expectations.We hosted Head of Investor Relations Martin Viecha,who sought to allay investor fears relative to the potential impact to Tesla from rising competition from German luxury vehicles(noting no automaker today offers the range of even the Tesla Model S from 2012),the potential impact from partial and then full expiration of US federal tax credits(noting the automaker actually saw an uptick in demand in the early part of 3Q19 vs.in 2Q19 following a step-down in the credit on July 1),and the pace of progress of construction and ramp of its Gigafactory in Shanghai(sharing a number of photographs which depicted a level of completeness that in our view materially exceeded investor expectations as well as our own).Dealership takeaways:Secular trends to continue benefitting Parts&Service(although see some uncertainty in warranty work);EBITDA likely to remain resilient even in case of a further modest deceleration in SAAR.Commentary from management teams suggested that Parts&Services revenue(which contributes 45%of dealer gross profits),is benefitting from secular trends,including:(1)the increasingly complex nature of vehicles,favoring dealers vs.independents;(2)the increasing average vehicle age of vehicles;and(3)company-specific initiatives around technician growth and retention.If there is an offset,likely it revolves around tougher warranty comps and a plateauing of growth in the number of 0-5 year oldvehicles in operation.The solid trend in Parts&Service revenue bodes well for offsetting the impact of any further deceleration in SAAR,with dealerships much better positioned vs.08/09,including given a higher mix of Parts&Service revenue and secular growth trends vs.prior,an improved ratio of used vs.new vehicle sales,and materially lower financial leverage.We want to thank the 53 presenting companies and more than 500 total attendees who turned out for this years J.P.Morgan Automotive Conference:536 of you turned out to meet with 22 CEOs,16 CFOs,and a number of foundersfrom 53 automotive companies,and to attend 7 management and consultant dinners and engage in nearly 1,000 1x1s.We hope you had as much fun and learned as much as we did!3North America Corporate Research19 August 2019Ryan Brinkman(1-212)622- Table of ContentsGeneral Motors(GM,Overweight).4Ford Motor Company(F,Not Rated).6Tesla(TSLA,Underweight).7IHS Automotive(industry consultants).9Experian Automotive(industry consultants).11Rating Agencies Panel Moodys,S&P,and Fitch Ratings.12General Motors Financial.14Adient(ADNT,Underweight).15American Axle&Manufacturing(AXL,Overweight).17Aptiv(APTV,Overweight).18Cooper Tire&Rubber(CTB,Overweight).20Dana Incorporated(DAN,Overweight).21Gentex Corporation(GNTX,Neutral).22Gentherm(THRM,Neutral).23Magna International,Inc.(MGA,Overweight).24Tenneco Inc.(TEN,Overweight).25Visteon(VC,Neutral).27KAR Auction Services(KAR,Neutral).29Asbury Automotive Group(ABG,Neutral).30AutoNation(AN,Underweight).31Penske Automotive Group(PAG,Neutral).324North America Corporate Research19 August 2019Ryan Brinkman(1-212)622- General Motors(GM,Overweight)GM Chief Financial Officer&Executive Vice President Dhivya Suryadevara presented on Day 1 of our annual automotive conference on Tuesday,August 13.GM remains as constructive about the long-term potential of the market in China but sees lower visibility near-term(albeit some potential for 2H vs.1H improvement).Management stated that relative to the China market,GM is“long-term constructive,short-term watching”.Long-term,GM continues to believe China is a greater than 30 mn unit market(including because China still has only 140 vehicles per 1,000 people vs.the US 800 per 1,000)but near-term has seen volumes fall in line with the decline in industry sales.Management attributed the softness to the overall in part to the ongoing US-China trade tensions which have weighed on the economy and consumer sentiment but updated also it believes the market has been impacted by the move from China 5 to China 6 emissions,with the latter contributing to maybe some stronger than otherwise industry sales but some softer industry pricing,as automakers placed greater incentives on some vehicles in order to move outgoing China 5 inventory.GM saw some reason to potentially be optimistic about demand for overall industry sales in the back half relative to the first,but noted it may be early to make this call,given that the move to China 6 for a portion of the country was only on July 1 and because the market is still experiencing some hangover of the discounting associated with that transition.GM is more optimistic about its own performance in the back half of 2019 than it is relative to the market overall.GM saw multiple reasons to be positive about its relative position in China,including because of the large number of launches it has planned for this year 20 in total,with many scheduled for the back half.GM cited its five brands in China(3 global Chevrolet,Buick,and Cadillac;and 2 local Wuling and Baojun)and its partnership with SAIC as fortifying its position in the market,noting the luxury market has been performing better than the market as a whole and Cadillac has been performing better than the luxury market.On full-size truck,light-duty,and SUVs strategy and launch strategy.Ms.Suryadevara reminded investors of GMs full-size truck strategy and updated on the success of its roll-out of all-new versions.GM purposefully staggered its“T1”architecture launch to be a bit more prolonged in order to minimize disruption and to create an overall smoother launch.Countering criticism of lost market share(e.g.,to RAM),it was reminded that GM only in 2Q finished rolling out the various trim levels for the light-duty full-size pickups,and if one were to consider the crew cabs which were rolled out first and so are now found in sufficient quantities in dealer inventory,there is evidence these vehicles are gaining greater market acceptance,for example having gained+3 ppts of share from 1Q19 to 2Q19.And only now are the heavy-duties launching,likely supporting share gain in this area in coming quarters,including after 40K additional capacity was added for these even larger pickups.With the company now participating in a broader range of price points and with more inventory available,the full impact of Volume and Mix benefits of the new trucks will be increasingly felt in 2H relative to 1H.5North America Corporate Research19 August 2019Ryan Brinkman(1-212)622- Update on GM Cruise GM would not trade its relative position in the autonomous mobility market for anyones;company is focused for now on expanded testing,not an IPO:GM CFO Suryadevara provided an update on GM Cruise,stating she believes there are three critical components to being successful in this area,including:having the right talent;having sufficient capital;and having the software and hardware residing under one roof.This latter factor is important because of the constant software iterations and close integration of software and hardware.GM is for now focused on expanding its testing in San Francisco and on continuing to grow its capabilities and attract talent.Update on transformational cost saving plan on track to realize$2.25 bn of run-rate savings by 2019-end,and$4.5 bn by 2020;savings are net,not gross:Management noted the need for both parts of its business the“core”(i.e.,its automotive operations)and the“future”(i.e.,its electric vehicle and autonomous vehicle development efforts,including any future robo-taxi business)to be strong and healthy and positioned for success.Having a strong core will allow GM the resources to invest in the future throughout the business cycle.Strengthening the core now,while industry conditions remain favorable,allows the firm to be more resilient during downturns and that is what GM was trying to accomplish with the transformational cost savings plan announced in November 2018.Management has so far driven$1.1 bn of run-rate by 1H19-end and expects to drive toward$2.25 bn of savings by the end of 2019 and$4.5 bn by 2020-end.When pressed on whether these savings should be viewed as gross or net,management reiterated that they are intended to be net cost savings,and that all contemplated electrification and autonomous spending is already incorporated into GMs guidance for capital expenditures to actually decline from$8.5 bn recently to$7.0 bn over time.Management is highly focused on free cash flow conversion:Managementreminded of its strong focus on closing the gap between net income and free cash flow by scrutinizing the various factors giving rise to differences and working one-by-one to eliminate them.GM converted only roughly 50%of its$9 bn 2018 net income into cash flow in 2018 but targets 100%over time,with some of the larger opportunities including within several years asking that GM Financial(post-transition to full captive)dividend 100%of its net income to the parent company and the targeted$1.5 bn reduction in capex.On downturn planning:Should US light vehicle SAAR decline by a historically typical-25%to-30%in the next economic downturn,management believes in this scenario that EBIT wo