Morgan Stanley issues warning on auto loans

TRW Automotive Holdings (TRW +0.8%), BorgWarner (BWA +0.5%) and Delphi Automotive (DLPH +1.8%) look more attractive to Morgan Stanley's Adam Jonas than General Motors (GM -0.1%) and Ford (F +0.7%) on concerns that auto loan credit will tighten.

"Subprime as a percentage of new car sales has approached pre-crisis peaks and leasing is setting new records." warns the analyst in his note to clients.

The trio of auto parts makers could have more global upside potential than the Detroit automakers if the U.S. auto industry hits some speed bumps.

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Comments (6)
  • kevinconway
    , contributor
    Comments (2754) | Send Message
    Once again, where is the money going to come from US consumer disposable income allocation to hit the projected auto sales volumes in 2014? MS weighs in with this shorly after the current inventory warnings. But people will still not pay attention and continue to believe that their favorite auto company will blow through their numbers.


    A setback will have a significant impact on the US economy. There are currently many variables working against the auto sales projections.
    12 Feb 2014, 02:47 PM Reply Like
  • croppled1
    , contributor
    Comments (75) | Send Message
    For years people have been told to sell at times as the beta is high . However you never know if you will get back in and a 500 share investment has turned into 4000 shares after returning all the original investment for many folks and more with a small sale and dividends over the years some would have 5000 shares if they held on to each one . BWA parts almost all create better gas mileage in vehicles which puts them in the sweet spot now as long as they execute which they have . Most agree with the conclusion that this is a better place to park then GM , F or even HM .
    12 Feb 2014, 03:12 PM Reply Like
  • starcorral
    , contributor
    Comments (1274) | Send Message
    If I am reading all this correctly, sales and profits have little relevance to stock performance until after the upside down situation on low downpayment sales is covered by wholesale value of car is above balance due. That could be four years on a 6 year loan. Might that mean the better the fundamentals, the more reason to avoid the stock?
    12 Feb 2014, 03:34 PM Reply Like
  • Jump0ff
    , contributor
    Comment (1) | Send Message
    Don't you understand? If you have $20 dollars and a ''recent'' paycheck stub, you can drive away with a brand new Nissan today!


    We own the financing company so we can assure you will get approved, (try not to think about the conflict of interest...)


    There's a big problem with auto loans in this country right now;
    12 Feb 2014, 03:46 PM Reply Like
  • cbroncos
    , contributor
    Comments (2428) | Send Message
    Ford would stand to gain as it has it's own financing arm whereas GM and Chysler do not.
    12 Feb 2014, 03:55 PM Reply Like
  • cbmetcalfe
    , contributor
    Comments (91) | Send Message
    @ kevinconway. There are just as many variables working for; 1) low P/E that investors like. 2) Increased average age of autos on the roads leading to replacement needs. 3) Potential of China and Europe markets. Just depends on if your an optimist or pessimist, right?
    12 Feb 2014, 06:15 PM Reply Like
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