Wall Street eyes auto industry earnings for signs of ‘demand destruction’

by | Oct 19, 2022 | Business

A sign advertises to purchase cars at a used car dealership in Arlington, Virginia, February 15, 2022.Saul Loeb | AFP | Getty ImagesDETROIT – Since the start of the pandemic in early 2020, U.S. automakers and dealers have seen record profits as demand outpaced supplies of new cars amid supply chain problems. But with interest rates rising, inflation at record highs and recession fears looming, Wall Street is closely watching third-quarter earnings results and guidance for any signs consumer demand might be weakening.”Auto sentiment is very poor. We get it. Higher rates, still high prices, low consumer confidence, a potential recession and European energy risk does not make autos a friendly place,” RBC Capital Markets analyst Joseph Spak wrote in an investor note last week.Spak said third-quarter earnings “should mostly be fine,” with the focus being on company commentary and guidance revisions. He said 2023 estimates for the sector need to “move materially lower.”RBC and other financial firms have signaled the auto industry’s supply chain issues could quickly shift to demand problems.Profits for U.S. and European car companies are set to drop by half next year as weakening demand leads to an oversupply of vehicles, UBS analysts led by Patrick Hummel told investors last week.He said the overall automotive sector in 2023 “is deteriorating fast so that demand destruction seems inevitable at a time when supply is improving.”GM/FordOn Oct. 10, …

Article Attribution | Read More at Article Source

Share This