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Yahoo
5 hours ago
- Automotive
- Yahoo
Automakers' Bonds Are a Hot Trade Now That Tariffs Are in Limbo
(Bloomberg) -- European carmakers are selling the most new bonds in years, seeking to take advantage of a calmer window in US President Donald Trump's trade war as well as strong investor demand for the high yields on offer. Next Stop: Rancho Cucamonga! ICE Moves to DNA-Test Families Targeted for Deportation with New Contract Where Public Transit Systems Are Bouncing Back Around the World US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn The Global Struggle to Build Safer Cars Automakers and parts manufacturers including Volkswagen AG and Mercedes-Benz Group AG sold more than €13 billion ($14.8 billion) of bonds in May, making it the busiest month for euro issuance in the sector since early 2017. Many more have launched deals in the first week of June, including a trio of junk-rated companies that supply components from car seats to steering wheels. The flood of sales comes after carmakers were effectively shut out of the market during the turmoil that followed Trump's so-called 'Liberation Day' announcements in early April. Since then, the president has retreated or scaled back various tariffs, including on auto parts, and markets have bounced back. At the same time, high demand for these sales — because of their hefty yields — are encouraging others to come to market. 'With the market feeling better and the buzz around tariffs somewhat abating, issuers are being opportunistic and tapping the market,' said Raphael Thuin, head of capital market strategies at Tikehau Capital. 'Financing is coming at a premium, but demand has been strong.' Deals from blue-chip carmakers have been well received, with BMW AG getting €6.5 billion in orders for a €2.5 billion offering. This week's junk-rated deals have also been popular. Volvo Car AB pulled in more than €1.9 billion orders for a €500 million sale, while French parts supplier Forvia SE — which saw its bonds tumble after Trump's April announcements — was able to increase the expected size of its offering. Investors are piling into the deals because tight bond spreads across the market haven't left much higher-yielding debt to invest in. The average yield on investment grade auto bonds sold in May was 3.49%, according to data compiled by Bloomberg compared with an average yield of 3.14% for an index of European high grade corporate bonds as of Thursday's close. Yields on junk-rated bonds are also proving tempting for investors. Troubled German parts firm ZF Friedrichshafen AG sold a five-year bond this week with a 7% yield, compared with 4.75% when it last sold euro debt in January 2024. The €1.25 billion sale pulled in more than €4.5 billion of orders. Demand has been helped by index-benchmarked investors, who may have cut their positions in the sector during April's turmoil and are now rebuilding them. 'This is a good opportunity to reduce underweights on credits, with deals pricing attractively,' said Chris Higham, portfolio manager at Aviva Investors. And there's plenty of cash to put to work. Money managers have been pouring money into European fixed income bond funds, with investment grade inflows hitting $3.14 billion and high-yield inflows reaching $1.02 billion in the week to May 28, according to EPFR data cited by Bank of America Corp. Still Cautious To be sure, carmakers are not out of the woods, with further tariff turmoil likely and levies on raw materials — like steel and aluminum — potentially making their costs more expensive. The current increase in borrowing costs may add to challenges in the future as well. Gordon Shannon, a portfolio manager at TwentyFour Asset Management said he has been 'startled with the way bond investors have embraced autos.' He cited the huge orders that investors put in for a Volkswagen AG hybrid bond — the riskiest type of debt that a corporate can sell — as an example of excessive enthusiasm. Tikehau's Thuin agrees. 'We view the sector as still facing long term structural headwinds which are nowhere near disappearing,' he said. 'Although the sector is trading cheap, we are still very cautious.' Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Sign in to access your portfolio
South China Morning Post
3 days ago
- Automotive
- South China Morning Post
‘Full of gunpowder': new price wars among China carmakers mask hidden dangers, Beijing warns
Beijing has amplified its warnings over cutthroat price wars among carmakers as deflationary pressure persists in the world's second-largest economy, and economists say a reflation is likely to remain elusive. The Ministry of Industry and Information Technology (MIIT), party mouthpieces and a carmaker association aired concerns at the weekend over recent discounts offered by manufacturers, while collectively deeming price wars a threat to product quality and the long-term development of the industry. 'Uncontrolled price wars among businesses are a classic example of 'involutionary' competition. They hinder companies' sustained investment in research and development, ultimately affecting product quality, performance and service levels,' the MIIT was quoted as saying on Saturday by the state-run Xinhua. 'There are no winners in price wars, and certainly no future.' 'Involution', or neijuan , refers to excessive competition for limited resources or opportunities. The ministry also vowed to step up governance over such competition in the industry. Echoing the ministry's call, People's Daily admonished the industry in a commentary on Sunday, describing the domestic carmaking sector as being in a 'sub-healthy' state, pointing to its shrinking profit margin in the face of industrial overcapacity.
Top Gear
21-05-2025
- Automotive
- Top Gear
Skywell BE11 Interior Layout & Technology
Interior What is it like on the inside? The execution of the cabin is the best part of the car. Not that there aren't several things wrong with it, but you can sit in the front seats and convince yourself it's a nice place to be. Even some established carmakers struggle to do that consistently. The interior looks well screwed together, with fake wood panels spanning the dashboard and doors, and contrast orange stitching just about pulling the leather seats back from the brink of 'dull'. There's lots of imitation leather that's actually soft-touch plastic, and liberal use of (also fake) chrome isn't our favourite gambit. But Skywell isn't the first to play that card and it won't be the last either. Advertisement - Page continues below The raised centre console eats into the sense of space up front, but the layout of the drive selector, e-parking brake and storage isn't too busy. And the armrest storage is cooled! So far so good. The touchscreen looks decent. It does. It's a 12.8-incher, boasting much LCD goodness. It's a shame the menu tabs aren't well defined, so it's hard to find what you're looking for; the layout in general is bamboozling. Defeat successfully snatched from the jaws of victory. The climate controls are on a permanent bar at the bottom of the screen. We laughed at the Scandi background pic given the various other echoes of Volvo, but you can change it to something else if you want. Meanwhile the 12.3in driver display is badly laid out and looks like it's from a different decade to the touchscreen. Weird. Let's not talk about the 'scrollers' on the steering wheel: they, er, don't actually scroll. Ugh. Quick, turn the radio on and distract yourself with the (commendably rich) eight-speaker audio. Advertisement - Page continues below How is it in the back? The rear's pretty roomy, but there's not much under-seat space to stretch out and wiggle your toes. And the seats themselves are quite firm and quite flat, so not ideal for longer trips. There's two USB ports back there (versus one up front) and a 10A socket, albeit one that'll need an adaptor to fit a UK plug. Boot space weighs in at 467 litres, which is at the lower end of what we tend to see from contenders in this segment. Knock the rear bench down and load capacity climbs to 1,141 litres.
South China Morning Post
21-05-2025
- Automotive
- South China Morning Post
Hong Kong's vision for low-altitude economy needs urban reality check
'Chinese carmakers race to build early advantage in flying car ventures' read a headline in this newspaper last week, reporting on the latest efforts by the companies to become leaders in the ' low-altitude economy '. This buzz phrase, which encompasses everything from drone deliveries to autonomous flying taxis, seems to be viewed in Beijing as an important technological frontier. Not to be left behind, Hong Kong recently announced plans for cross-border electric vertical take-off and landing (eVTOL) routes and 38 pilot projects. Hong Kong officials are talking up this sector with the certainty of a preordained future, aligned with the mainland's projections of a 2.5 trillion yuan (US$346.6 billion) market by 2035. But how relevant is this vision for our dense city of skyscrapers and congested pavements? Does it really have the scale of an 'economy' to justify the hype and public investment? Let's start with what should be obvious: flying taxis are not a scalable local transport solution for a city like Hong Kong. Even for those reluctant to use Hong Kong's excellent public transport system, taxis and cars provide a convenient point-to-point service, with access to virtually every location in the city via our extensive, and mostly uncongested, road system. Flying taxis will only have access to designated ' vertiports ', requiring additional walking or driving to complete most journeys. This removes much of the appeal for those who will be able to afford such services when compared to spending the entire journey in the back seat of a chauffeured car. There is a much better case to be made for eVTOL passenger services linking Hong Kong to cities around the Greater Bay Area. Flying over the complex geography of the region could cut travel times significantly compared to existing road and rail links. Unlike the current helicopter service from Shun Tak to Macau , eVTOL technology can probably scale up and support regular, scheduled routes, making them more accessible to the general public.
The Independent
18-05-2025
- Automotive
- The Independent
The electric car market is booming. So why are British drivers still paying a premium?
The electric car revolution is no longer hypothetical, it's roaring ahead at a speed that is literally making roads quieter, communities cleaner and transforming the auto industry in real time. More than one in four cars sold this year are set to be EVs, and in China, most of them already cost less than £23,000 a piece. But if EVs are becoming cheaper and more widespread, why are British and European drivers still paying premium prices? This week's Global EV Outlook from the International Energy Agency (IEA) offers a clear answer: the global EV market is booming, but protectionist barriers are shielding domestic carmakers from cheaper imports, particularly from China, and unfortunately that means they're keeping prices artificially high for consumers like you and me. But they're also protecting local manufacturing jobs in legacy car companies. They're protecting regional economies and brands that have literally shaped the world's economy over the last 50 years but are now struggling to keep up with the innovative supply chain superiority that Asia's biggest car makers have been perfecting for the last decade. The question is, how long can these measures protect these jobs, and is it actually worth it? Last year, more than 17 million EVs were sold worldwide, growing by 3.5 million sales in a year, and showing no signs of slowing down. In the first quarter of 2025 alone, global EV sales are up by another 35 per cent. Unsurprisingly, China remains the epicentre of global EV growth. More than 11 million EVs were sold there in 2024, making up nearly half of all new car sales in the country. After years of European and American car makers betting big on the Chinese market, it seems that these billion dollar symbols of industrial superiority simply can no longer compete. In 2020, foreign-branded cars made up more than two-thirds of all car sales in China, now, they've fallen to just 32 per cent, and most believe even this declining market share looks fragile. One of the biggest reasons is cost. EVs are not only cheaper to run anywhere in the world, in China, they're now cheaper to buy as well. Last year, two-thirds of EVs sold were cheaper than petrol cars in their same class, and that's without any government consumer subsidies. Contrast that with Germany, where electric cars cost 20 per cent more than their internal combustion cousins, or in the US, where Tesla's almost monopoly has pushed that gap closer to 30 per cent. What's keeping EV prices high in Europe and the US? Local manufacturing and labour costs are one key element, but tariffs and trade policies are playing an outsized role. Last year, the EU increased tariffs on Chinese-built EVs as high as 45.3 per cent, and even before Donald Trump found his way to the White House, Joe Biden had already placed a 100 per cent tariff on Chinese EVs. The UK on the other hand didn't follow in the tariff trend last year, and is now seen as one of the best opportunity markets for Chinese EV makers, and British drivers should expect a flood of new brands and new low-cost models available this year. The reality though is that Chinese companies are not just winning on sticker price, they're dominating on everything from supply chains to automation, efficiency and even choice. China accounts for more than 70 per cent of global EV production and there is so much competition, it's driving down global battery prices at a rate of knots. Battery prices had already been falling for years, but in China they dropped by an additional 30 per cent last year. But they're also dramatically expanding choice. In the US, where Chinese cars are effectively banned, drivers could choose from 24 new electric car models launched last year. Across the EU there are close to 290 models to choose from, but in China, consumers can choose from over 700 different EVs. Since an electric vehicle is effectively a battery on wheels, this dramatic decline in battery prices and ramp-up in choice brings us to a challenging question: Is the West pricing itself out of the EV transition to protect local jobs? And if it is, is this a price worth paying? The case for protecting domestic jobs is real. The auto industry employs millions of people across Europe and the US, and global supply chains put these jobs at a real risk. If Chinese consumers have already abandoned foreign cars en masse, will European consumers remain loyal, and pay more for these marquee local brands? Last year's tariffs suggest that policymakers at least don't believe they will. And this is genuinely something worth protecting. But this also comes at a real, everyday cost. EVs are cleaner, quieter and cheaper to run, and transport emissions across the EU, US and UK remain stubbornly high. Every family that can't afford to switch to a cheaper EV remains locked into ongoing petrol bills and higher maintenance costs. Even if oil prices fell to $40 a barrel, charging an EV at home in Europe would still be half the cost of filling up a conventional car. That's the real policy dilemma facing just about any country with a local car industry right now. Should we hold on, and protect local jobs and local brands as long as we can by blocking Chinese competition? Or should we do everything possible to support cheaper, cleaner and quieter cars on the road? This is a fine balance, and one with risks on both sides. There's no easy answer. But as policymakers in Washington, Westminster and Brussels contemplate whether or not to hold onto protectionist tariffs or open up their markets to this new generation of cars, they should be honest about the real trade-offs, and prepare to support those workers in the long-term, and aim to at least achieve a fair transition, even if its not the fastest.
