Market Monitor Sweden 2015 - Automotive

Payment behaviour in the Swedish automotive sector is quite stable, and insolvencies are not expected to increase in the coming months.

Sweden´s robust economic performance (GDP grew 2.4% in 2014 and is expected to increase 2.6% in 2015) has supported the automotive sector. New passenger car registrations reached an all time high in August 2015.

The Swedish car producer segment is dominated by Volvo Cars in the passenger car and by Volvo AB and Scania AB in the truck segment. Their performance widely determines the performance of smaller Swedish suppliers.

Both demand and profit margins are expected to remain stable in the Swedish automotive industry. Competition remains high in the car retail segment, but has decreased in the passenger car producing subsector after Saab Automobile went bankrupt in 2011.

Most businesses in this sector should be financially resilient enough to cope with some minor volatitily in demand or commodity prices. Depending on the level in the supply chain, payment duration in the automotive sector ranges between 30 days and 90 days. Payment behaviour is quite stable, and insolvencies are not expected to increase in the coming months.

In the past our underwriting was more restrictive following the SAAB Automobile bankruptcy and a few years of poor results for Volvo Cars. However, we have gradually increased our risk appetite again, as most suppliers sucessfully managed the transition from supplying SAAB to other customers. At the same time Volvo Cars' sales performance has improved again in recent years. The truck sector has been reasonably stable for years, so we have been able to issue substantial credit limits for quite some time.

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