China Efforts to Fight Pollution Will Have Major Impact on Auto Industry

In order to pollution in China, Deutsche Bank strategist Jun Ma has proposed a policy mix to improve air quality. Proposed changes would cap volume growth rates on passenger vehicles and negatively affect OEMs such as GM (NYSE: GM) and Ford (NYSE: F). Importantly, analysts at the bank are confident China policy will eventually move in this direction.

"Overall, we believe that the implementation of an aggressive policy mix to curb Passenger Vehicle growth would have significant negative implications for the global automotive industry," wrote analyst Rod Lache. "We also believe that a curb of growth rates would lead to a period of significant pricing pressure due to overcapacity, as capacity growth would be difficult to slow in the short-term. We have previously highlighted declining capacity utilization as a risk for this market even at high single digit growth rates."

If China moves forward with the changes Deutsche Bank expects, in addition to GM and Ford, the following companies would be impacted: Johnson Controls Inc. (NYSE: JCI), Delphi (NYSE: DLPH), TRW Automotive Holdings Corp. (NYSE: TRW) , Autoliv, Inc. (NYSE: ALV), and Lear (NYSE: LEA).

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Piper Sandler Reiterates Overweight Rating on Estee Lauder (EL), 'F4Q26 Preview'
• Jefferies on Five Below (FIVE): 'Our latest channel checks reinforce our view that FIVE's momentum extends well beyond viral Squish trends'
• UBS Reiterates Buy Rating on NVIDIA (NVDA), Expects Q2 Revenue Beat