Five percent decline for suppliers: Report

TMD Friction 'most vulnerable' firm listed according to Moody's

Moody's sign

Published:  09 November, 2012

CREDIT rating agency Moody's has turned its attention to the parts aftermarket. As a result of fuel prices increasing, the group, famous for its ability to make decisions on the credit ratings of nations, has concluded that motorists 'may delay regular car maintenance, which would result in lower spare parts sales at garages and repair shops'.

The agency has earmarked various aftermarket suppliers as being particularly susceptible to a downslide equal to five per cent or more. TMD Friction was cited  as being 'the most vulnerable of our rated automotive suppliers to a decline in demand for spare and wear parts.'

Describing TMDs position, the reports summary read: 'In the first half of 2012, the brake friction supplier derived 85% of its revenues from Europe and 71% of that was generated by the company's aftermarket business. We estimate that if the European aftermarket contracted 5.0%, TMD Friction's revenues would fall by 3.0%'

The report also examined the position of firms such as Hella - a firm which the agency says derives one fifth of total revenues from the European aftermarket. However, if the market drops by 5.0%, the group's total income is only likely to fall by just over 1.1%

Firms that are developing OE technology fare rather better in Moody's eyes. Valeo for example is developing fuel efficient systems such as start/stop which should negate any drop in total aftermarket revenues.

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