The Weekly Brief (28 September 2015)Contributor Global Markets Insights Strategy Team
Last week was a tough week for the European Auto sector as Volkswagen’s US business admitted to rigging emissions tests.
Concern surrounding the consequences for Volkswagen and other automakers has led the European Auto and Parts index to fall 6.9%. Weak pricing power and exposure to emerging markets such as China, where growth is slowing, has led to increased uncertainty and pressure in the market. The chart below shows that during the past 12 months automakers initially outperformed the market but recently have underperformed. European car manufacturers are perhaps in the slow lane, but it’s not all bad news for these companies with the potential for further euro weakness being viewed as a positive.
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