Jefferies says car parts makers face continued challenges; prefers Forvia, Autoliv

Autoliv

02/07/2025 13:00

** Jefferies says diversified car parts suppliers continue to face challenges, including from Chinese competition and higher R&D spending, leading to volume and cost headwinds

** The broker assumes coverage of four suppliers, rating Forvia FRVIA.PA and Autoliv ALV.N, ALIVsdb.ST as "buy", Schaeffler SHAn.DE and Valeo VLOF.PA as "hold"

** If Chinese supplier penetration in Europe grows in line with the forecast Chinese OEM production, European suppliers' revenue streams could fall by more than 10% by 2030, it says

** Competition risk is the highest to Valeo's European sales and the lowest to Schaeffler, it says, while Forvia's European partnership with Chinese BYD "provides comfort"

** "The mix impact from newer tech will likely cap margins below prior levels, but there are opportunities from restructuring/AI" - Jefferies

** Autoliv does not have the same level of risk related to the EV transition or Chinese competition, it adds

** While Schaeffler has potential to double its EBIT by 2027, the execution risk is not negligible, Jefferies says

** Forvia has material potential due to underperforming businesses, while for Valeo the mindset change needed to cut high R&D spend seems more challenging, it says

 (Reporting by Amir Orusov)

 ((Amir.orusov@thomsonreuters.com))