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  • 07/02/2019
    Fixed Income
    Ilana Elbim
    Ilana Elbim, Credit Analyst, Hermes Investment Management, explains that the insights she gained from the conference floor at this year’s show reaffirmed convictions in a long-held relative-value trade involving two giants from the Motor City.
  • 11/04/2018
    Fixed Income
    Ilana Elbim
    The slowdown in US auto sales and the heavy use of financing deals by car buyers have driven Ilana Elbim, Credit Analyst at Hermes Investment Management, to take a cautious stance on the sector. The US automotive sector has shifted up through the gears since the 2008 financial crisis. Seasonally adjusted annual sales (SAAR) of new cars and light trucks reached a peak of 17.6m in 2016, higher than the 16.2m recorded in 2007 and 10.4m as the crisis unfolded in 2009. By interrogating the data, we find that light trucks – including pick-up trucks, sports utility vehicles and crossovers – have led the ongoing recovery since 2015 as passenger-car sales began to decline (see figure 1). This demand was driven by factors including evolving consumer preferences, lower oil prices and manufacturers’ aggressive use of discount incentives. Macroeconomic conditions also helped fuel the recovery, enabling automakers to offer financing to potential buyers at low interest rates and with longer terms. Immediately after the crisis, the proportion of vehicles bought through finance was in the mid-70% range but today it stands at 85%.
  • 01/03/2018
    Fixed Income
    Ilana Elbim
    The long-dominant internal combustion engine is rapidly taking a back seat to electric vehicles, as regulation drives innovation in the automotive sector, according to the latest Credit Spectrum.