Tesla, GM, Delphi Best Stocks In A Worsening Auto Market

In a new report, Credit Suisse analyst Dan Galves discussed struggling auto stocks. Despite a record-setting 2015, Credit Suisse is projecting flat SAAR for the auto industry this year.

Galves explains that in the near-term, “Sentiment remains very poor, with Buyside seeing negative risk/reward with high conviction.” He added that he currently sees “limited upside if volumes come in better-than-expected… and little valuation support if US volumes turn downward and/or global macro worsens.”

Related Link: Barclays A Bear On Oil: Sees $37bbl At Most This Year

Luxury brands endured particularly harsh gross margin pressures in Q4. Galves also notes that much of the luxury weakness is centered on German brands, including Audi, BMW and Mercedes.

Not surprisingly, China was also a major source of weakness for luxury brands in Q4. While the global market witnessed a 20 percent increase in luxury brand volumes, China’s luxury volumes climbed just 7.0 percent on the quarter.

Credit Suisse names Delphi Automotive PLC DLPH, General Motors Company GM and Tesla Motors Inc TSLA as the top relative outperformers in a weak auto industry in 2016.

Disclosure: the author holds no position in the stocks mentioned.