Global light vehicle sales are expected to contract for a second consecutive year in 2020, according to Moody’s Investor Service. North American and European suppliers will be hurt by crumbling automotive sales. Light vehicle sales have been hurt by weakening economic growth in essential markets, such as China and key G20 nations, Moody’s says. Sales will drop 0.9 per cent after falling a projected 3.8 per cent last year. The outlook for the next 12 to 18 months is grim.
This malaise hasn’t held back TI Fluid Systems' (TIFS) shares, which gained over 50 per cent in 2019. The group, which has manufactured automotive fluid storage, carrying and delivery systems for almost a century, consistently outperformed the European and Asia Pacific markets last year. It did fall behind in North America, owing to slower launch activity and its lower exposure to SUVs and light trucks here. Regardless, Peel Hunt analysts expect the group to outperform flat global production this year and beat 1 per cent market growth in 2021 too, lauding the company for its flexible cost base.
The FTSE 350 is not rich with automotive companies. Aston Martin Lagonda (AML), the UK’s only listed car manufacturer, has had a torrid time since going public in October 2018. The hype surrounding Aston’s ambitious growth plans and its £19 listing price feel distant. The shares are now trading around £4, the company is borrowing at eye-watering levels of interest and management has admitted to investment talks with outside parties. It attributed some of its performance shortfall to the automotive environment – the very environment that saw the unlisted Rolls-Royce announce record sales on the same day of Aston’s January profit warning. Aston is pinning its hopes on the release of its first SUV model, the DBX. So far, the company has been encouraged by order levels.