•  Richard Morris 

    Automotives – Sector focus

    Author: Richard Morris, Relationship Director
    Publication date: 01.08.2010

     
    I have looked after automotive in Major Corporates for the past seven years, having previously worked in the manufacturing space at other financial institutions in the US and UK for more than 20 years.

     
    The bank’s engagement with multinational sector players complements a strong middle market and functional expertise in our core UK market, represented by the bank's Black Horse, Lex Autolease and large corporate/commercial activities.

    Automotive is a truly global industry, and also a major UK employer across assembly, components suppliers, finance captives and dealers. The industry faced an unprecedented, recession-related shock in 2008/9, and is now in the early stages of recovery despite termination of most scrappage schemes.

     
    Production is picking up, even though ongoing financial market dislocation poses financing challenges for both the automotive supply chain (in terms of funding expanded working capital) and automotive finance captives. The pace of recovery remains unclear, particularly in the U.S., even though to date unit volume has rebounded from historical lows. Also in the U.S., Ford and GM have returned to profit, reflecting a significant lowering of their break even point, and GM plans an IPO shortly to repay U.S. taxpayer funding. Earnings recoveries are also evident amongst European industry players.

     
    We anticipate some divergence in performance as industry leaders capitalise on the recent recession by increasing market share. In our view, the point of maximum danger in terms of an implosion of the U.K. and global automotive industry is past.

    My immediate focus will be on supporting key customers through the cycle, working with them to maintain their liquidity in a stressed environment, developing creative supply chain finance solutions and expanding the access of manufacturer finance captives to bank, securitisation and capital markets financing. To add value, Lloyds needs to engage with selected global companies outside our home market, and with sufficient product variety and balance sheet support to secure our emerging reputation as a significant, as well as reliable, partner with key industry players.

     

    Source: This article was first published in Lloyds Banking Group - Perspective Magazine Edition 2.
     

2/21/2018 1:36:35 AM