With the advent of the epidemic, multinational car companies may fall into the "darkest moment"

In the movie "The Big Short", before the subprime crisis in 2008, investment geniuses who were good at short selling first targeted bonds with a credit rating of B... Now the crisis has not yet come, but there are signs of it. First appearance. ?

The debt of the automobile giant Ford Motor fell to BB+ (junk level) due to the epidemic. The reason given by Standard & Poor's for the downgrade was "due to the closure of Ford's factories around the world, including all North American factories, and no The company is facing huge financial pressure when deciding when to resume production?

In fact, Ford is not the only car company facing financial pressure. The epidemic is dragging the world's major car giants into an "economy." crisis. Volkswagen is borrowing money from the European Central Bank, FCA has established a US$3.84 billion emergency credit facility, and Renault is seeking financial support from the French government...?

▼? Volkswagen closes factories?

Volkswagen Group CEO Herbert Diess said in a recent interview with the media that “if the epidemic cannot be controlled, the company may have to lay off employees because the company still needs to spend about 2 billion euros (equivalent to RMB) every week. About 15.7 billion)". According to Diess, Volkswagen currently has no production or sales outside China. ?

Herbert Diess

The Volkswagen Group currently has 671,000 employees and 124 factories around the world. Volkswagen previously stated that most factories have been closed, and the closure time is "tentatively scheduled for 2-3 weeks." ". ?

According to British media reports, Volkswagen Chief Financial Officer Frank Witter called on the European Central Bank to send a "clear signal" and purchase short-term bonds, which are usually 6 or 9 months old, "as soon as possible" expires later. ?

The European Central Bank has previously said it would boost markets, including through purchases of commercial paper, as part of a 750 billion-euro asset purchase program aimed at containing the financial shock caused by the coronavirus. It is unclear whether the ECB has started buying commercial paper. ?

“We have a variety of funding sources, but not all of them are as liquid as they were in the past.” Frank Witter said. Under its financing plan, Volkswagen has the ability to issue up to 15 billion euros in commercial paper.

▼? Credit rating downgrade?

Toyota Motor is also borrowing money. According to Japanese media reports, Toyota Motor is applying for a total of 1,000 billion yen (equivalent to approximately RMB 65.8 billion) in loans from Sumitomo Mitsui Banking Corporation and Bank of Mitsubishi UFJ to ensure that Toyota Motor has sufficient funds to cope with the impact of the epidemic. Affected by the epidemic, Toyota has closed many factories in North America, Europe, Brazil and other places. ?

Like Ford, Toyota recently experienced a credit downgrade. On March 26, Moody's, one of the three major international rating agencies, lowered Toyota's credit rating from AA3 to A1 and stated that if the impact of the epidemic on the global auto industry does not pass as soon as possible, its rating may be further downgraded. Although Toyota still has an A rating, a downgrade in its credit rating will increase the cost of Toyota car loans.

In fact, the threat to credit ratings is affecting the entire industry.

Last Wednesday, Moody's placed seven European automakers, including Daimler, Volkswagen and Renault, on the downgrade watch list, and downgraded BMW's debt rating from A2 to A1. According to foreign media reports, Daimler is seeking a credit line of 10 billion to 15 billion euros. However, Daimler said it still has sufficient funds and does not need to apply for government assistance. ?

"The automotive industry has been one of the sectors hardest hit by shocks, given its sensitivity to consumer demand and sentiment. These companies remain vulnerable to the continued spread of the epidemic." Moody's said stated in the report. ?

Moody's will also consider downgrading General Motors to junk bonds. At the same time, Standard & Poor's also stated that it has placed General Motors on its credit watch list. ?

“The severe disruption to auto demand caused by the epidemic, coupled with the possible subsequent economic recession, will put considerable pressure on General Motors’ cash flow and credit metrics.” Moody’s warned.

Faced with cash flow pressure, General Motors chose to withdraw its 2020 financial performance targets released in February and borrowed US$16 billion from existing credit lines to increase GM's cash reserves to US$32 billion. Dollar. Industry analysts say that when car companies are in trouble, timely adjustments to performance targets can avoid investors losing confidence in companies that have not achieved profitability at the end of the fiscal year. ?

Ford has decided to activate two unused credit lines and actively raise US$15.4 billion in additional cash to ensure the company's stable cash flow; at the same time, Ford said in a cost reduction plan, Effective May 1, 20% to 50% of the compensation of Ford Motor Company's top 300 senior managers will be deferred for at least five months. ?

▼? Being copied on the bottom? Nationalized?

Unlike Volkswagen and Daimler, Renault is facing the controversy of whether it will be "nationalized".

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The French Finance Minister said that in the face of the impact of the new crown pneumonia epidemic, the government will take all measures to support large French companies, which can be corporate restructuring or (government) equity participation; if necessary, the government will support state-owned enterprises change. ?

Foreign media reported that French Finance Minister Bruno LeMaire has met with PSA Group President Carlos Tavares and Renault Chairman Jean-Dominique Senard. -Dominique Senard) and other executives had direct conversations. This conference call conveyed two important messages. On the one hand, the French government promised to provide them with loan guarantees and other help; on the other hand, if necessary, in order to prevent French industrial giants from going bankrupt, the government may resort to nationalization. . ?

French Finance Minister Bruno Le Maire

“If we want to protect our country’s industrial heritage, we must resort to nationalization, and we are prepared to go that far.” Le Maire said .

Le Maire’s words are mainly aimed at the remarks that “foreign capital” will buy the bottom of car companies in the market. Since the beginning of this year, the stock prices of many European car companies have halved. On March 19, Volkswagen’s stock price fell from 185.28 euros per share at the beginning of the year to 87.84 euros, a drop of 52.6%; Daimler’s stock price fell from 185.28 euros per share at the beginning of the year to 87.84 euros per share. It fell from 49.68 euros to 21.84 euros, down 56%. Similarly, Renault's current share price (17.9 euros) has fallen 57% from the beginning of the year. ?

Renault’s stock price performance

Under this situation, there are rumors that European car companies may be maliciously hunted down. Previously, the German cabinet revealed that in order to protect domestic companies from acquisitions by foreign companies, Germany will provide liquidity support to companies, with a support amount of approximately 150 billion euros. Unlike Germany, the French government intends to nationalize companies that have been severely affected by the epidemic. Currently, the French government has banned short selling of 92 stocks, involving BNP Paribas, Renault, Air France and other companies and institutions. ?

Renault Chairman Jean-Dominique Senard

In response to the rumors of nationalization, Jean-Dominique Senard said that Renault has not considered nationalization, but Renault may seek guarantees from the French government to strengthen its financial position amid the coronavirus pandemic.

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This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.