Morgan Stanley estimate Ford (F -1.1%) will see gross cost savings of $1.75B this year from restructuring and recurring savings actions.
"We view such savings as critical to offset the headwinds of a slower top line, rising compliance/technology costs and price pressure from capacity additions in many key segments (SUVs, pickups)," notes analyst Adam Jonas.
"While only partially reversing previous years’ underperformance, we believe execution of cost cutting has been key to maintaining a decent full year outlook and pushing out the risk of adverse ratings agency actions," he adds.
In what could be a negative development for auto suppliers, Jonas says a coordinated effort by OEMs to reduce complexity of their vehicles within propulsion, infotainment, safety systems and other functions may provide the next significant opportunity to cut costs. "A pure-EV vehicle ultimately lends itself to less complex architecture and a lower BOM than an ICE, once battery costs decline on greater manufacturing scale," he observes.
Auto suppliers: Veoneer (VNE +0.7%), BorgWarner (BWA +1.8%), Lydall (LDL +1.3%), American Axle & Manufacturing (AXL +1.3%), Dana (DAN +1.5%), Aptiv (APTV +0.5%), Johnson Controls (JCI +0.2%), Stoneridge (SRI +0.1%), Gentex (GNTX +1%), Modine Manufacturing (MOD +0.5%), Standard Motor Products (SMP -0.5%), Allison Transmission (ALSN +0.5%), Autoliv (ALV +0.4%), Lear (LEA), Adient (ADNT -0.3%), Tenneco (TEN +0.2%), Visteon (VC -1.4%), Cooper-Standard (CPS -2.3%).
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