MIZUHO SECURITIES USA INC. | US EQUITY RESEARCH
Summary
We take a look at the June auto sales around the world. Overall, sales remain strong with continued strength in Europe and China, flattish U.S. sales, and flat to down trends in Japan. Also, 2016 YTD global Auto trends for the 4 major regions (U.S, China, Europe and Japan) are combined better than 2015. Overall a strong Auto market should be positive for NXPI, CY and ON.
Key Points
2016 year-to-date (YTD) global auto sales better than 2015. For the four major regions (U.S., Europe, China and Japan) we track, overall 2016 sales trends are strong. For the four regions, total 2Q16 auto sales were flat q/q, and up 6% y/y, above 2Q15 sales being up 2% y/y. For 1H16, total global auto sales for the 4 regions, were up 5% y/y better than 1H15 up 3% y/y.
A look at 2016 YTD auto sales (through June 30) for the U.S., China, Japan, and Europe. China auto sales for the month of June were up a strong 15% y/y. Europe saw continued strength with sales up ~7% y/y after a strong May up 16% y/y. Japan sales were soft, with June sales down 5% y/y. U.S. monthly auto sales for June were down 1% m/m but up 1% y/y. With multiple mandates, the U.S. will remain a focus for suppliers. Big picture, we continue to see automotive as a secular, long-term growth story driven by electrification, new innovative technologies, multiple new OEM disruptors, transportation models, and global mandates.
Increased sales should be a tailwind for semi automotive suppliers such as CY(~35% Autos), NXPI(~41% autos), and ON(~40% Autos), especially as ADAS ramps, we believe, are being pulled in to reflect increased consumer demand and expected government mandates in the next 2-3 years. We believe the U.S. remains an attractive market for the semiconductor industry with multiple mandates including rear-view cameras. In addition, AEB is in less than 6% of U.S. vehicles but we believe 2017 could bring a ramp of that as well. Nonetheless, it will be key to watch any BREXIT impact in 2H16, though China and rest of Europe (ex-U.K) trends should continue strong.
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