Standard & Poors Equity Research Sees a Tough Year for U.S. Auto Stocks

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NEW YORK, March 23 // -- With automobile manufacturers' stock prices slightly underperforming the broad S&P 1500 stock index so far in 2007, Standard & Poor's Equity Research Services believes that this sub-industry is in for a rough ride throughout the year. Although prospects do differ from company to company, Standard & Poor's Equity Research Services' fundamental outlook is negative for auto stocks this year, as stated in a feature article titled "Equity Insight: Not Much Added Shine For Auto Stocks This Year" to be published in the April 4th issue of CreditWeek, the financial market intelligence leader's weekly outlook on credit risk.

    Standard & Poor's Equity Research believes American auto companies will struggle as an unfavorable shift in the mix of models combines with heightened competition. These factors, along with an expected drop in demand both this year and next, should lead to restrained profits and limited share price appreciation, according to Efraim Levy, senior automotive equity analyst, and author of the article. Levy also sees the Detroit Three automakers losing ground in 2007 as foreign carmakers take more market share.

    "While cost-cutting efforts may boost domestic auto profits, a number of factors including high gasoline prices may counter this and hurt revenues," said Levy. "The competitive landscape is widening and intensifying with new product introductions and buyer incentive programs. In our view, the Big Three's dominance is waning and they're becoming more vulnerable in a number of areas. These include light trucks, which may be hurt by a weakened housing market, as well as the luxury vehicle market, where margins are being squeezed by increased luxury import sales."

    The article is part of a special auto report published dually on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, and in the April 4th issue of CreditWeek, the financial market intelligence leader's weekly outlook on credit risk.

    TELECONFERENCE REPLAY INFORMATION

    Standard & Poor's Ratings Services held a telephone conference call on Friday, March 23, 2007 to discuss its forthcoming special CreditWeek report on the state of the global auto industry, addressing the 2007 outlook for global automakers. Speakers participating in this teleconference were Standard & Poor's automotive equity analyst Efraim Levy; automotive credit analysts Maria Bissinger, Robert Schulz, and Gregg Lemos-Stein; and Kevin Riddell from the J.D. Power & Associates powertrain forecasting team. (Like Standard & Poor's, J.D. Power is a division of The McGraw-Hill Cos.)

    Recorded replays of the call are available and can be accessed through two options.

    Replay Number: 1-203-369-0965

    These replays are available until Friday, March 30, 2007

    Replay Web Streaming: http://www.mymeetings.com, Under Events, Select Join an event

    Passcode: SANDP

    Conference ID#: 6513088

    These replays are available until Friday, April 20, 2007

    Please note that Standard & Poor's offers all of its broadcast teleconference calls to all interested participants on a complimentary basis.

    About Standard & Poor's

    Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.

    The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's. Standard & Poor's does not trade on its own account. The analytical and ethical conduct of Standard & Poor's equity analysts is governed by the firm's Research Objectivity Policy, a copy of which may also be found at http://www.standardandpoors.com/.
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