Deutsche Bank Slashes Automakers and Suppliers To Sell Following Bailout Failure (F, AXL, LEA, TRW, MGA)

December 12, 2008 7:25 AM EST

Following the failure of the auto bailout in the Senate, Deutsche Bank is downgrading a number of auto makers and auto supply makers to Sell, calling it an "End of an Era." Downgraded to Sell were: Ford (NYSE: F), American Axle (NYSE: AXL), Lear Corp. (NYSE: LEA), TRW Automotive Holdings Corp. (NYSE: TRW) and Magna International, Inc. (NYSE: MGA).

Deutsche Bank said, while there may be a reprieve from the Bush administration using TARP, an increasingly difficult operating environment will likely force leveraged automaker and supplier stocks to near bankruptcy levels."

They said there is now a strong probability that U.S. auto sales decline even further as: "1) residual values decline; 2) consumers grow increasingly wary of GM and Chrysler vehicles; 3) Third party finance companies become increasingly cautious about lending for purchases of Big Three vehicles; 4) captive finance companies are thrust further into financial distress (and in some cases covenant risk) 5) a growing number of dealers close, and; 6) NA unemployment is likely to rise even higher than previously expected."

Related Categories

Downgrades

Stocks Mentioned

Related Entities

• Deutsche Bank
• Chrysler LLC
• Bankruptcy

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