Market Monitor Automotive Sweden 2016

Most businesses in the automotive sector should be financially resilient enough to cope with some minor volatility in demand or commodity prices.

The Swedish car producer segment is dominated by Volvo Cars in the passenger car and by Volvo AB and Scania AB in the truck segment. Those OEMs are mainly export-oriented, and their performance widely determines the performance of smaller Swedish suppliers, among them many engineering businesses.
Sweden´s robust economic performance (GDP grew 4.2% in 2015 and is expected to increase 3.5% in 2016). Robust global demand has supported growth in the automotive sector, which is expected to record valued added growth rates of 2.8% in 2016 and 4.6% in 2017.
Profit margins are expected to remain stable in the Swedish automotive industry. Most businesses in this sector should be financially resilient enough to cope with some minor volatility in demand or commodity prices. The current low interest rate environment favours companies in servicing their debt, and banks are willing to lend.
Depending on the level in the supply chain, payment duration in the automotive sector ranges between 30 and 90 days. The level of non-payments and insolvencies is low, and this is expected to remain unchanged in the coming months. Our underwriting stance remains generally open for this industry.

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