(The following statement was released by the ratings agency).
LONDON, Aug 21 - Credit quality among vehicle manufacturers with significant operations in Europe is unlikely to be affected in the medium term by their need to make provisions for recycling end-of-life vehicle (ELVs), according to research published today by Standard & Poor's Ratings Services.
The report, which updates a previous commentary article entitled "Europe's Carmakers Prepare for Stringent Vehicle Recycling Legislation," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, on Jan. 16, 2002, identifies the financial provisions made by carmakers in the first half of 2002 for handling ELVs.
The recent decision by the European Commission to take legal action against all 15 EU member states for not implementing ELV legislation--planned to take effect in 2007--by the April 21, 2002, deadline has further highlighted the need for carmakers to take action. "Certain states have already taken steps toward this goal, tasking vehicle manufacturers with ELV collection costs," said Virginie Casin, a director of Standard & Poor's Corporate Ratings Europe. "As a result, the carmakers have started to make provisions in the first half of 2002, the amount of which equates to the net present value of the expected cost of collecting and recycling cars from January 2007.
"French carmakers Peugeot S.A. (A-/Positive/A-2) and Renault S.A. (BBB/Negative/A-3), however, have both come to the conclusion that no meaningful incremental cost is expected from impending new ELV legislation in France," she continued. "Nevertheless, they, along with Ford Motor Co. (BBB+/Negative/A-2), General Motors Corp. (BBB+/Stable/A-2), and Fiat SpA (--/--/A-3), warn that additional provisions may be needed for countries that have not yet passed ELV legislation."
The research update, entitled "Carmakers Provide for European Vehicle Recycling Costs," is available on RatingsDirect. For a copy of the update, contact the Standard & Poor's Ratings Desk in London on (44) 20-7826-7400.