Moody's ups Europe car parts makers to stable

Moody's Investors Service said it revised the outlook for European automotive parts manufacturers to stable from negative.

The stable outlook reflects expectations for the fundamental credit conditions in the industry over the next 12 to 18 months, Moody's said.

Some of the companies rated by Moody's in this segment include Continental AG, Duerr AG, Valeo SA, TMD Friction Group SA, GKN Holdings plc and Compagnie Générale des Etablissements Michelin SCA.

The agency said it believes that measures recently implemented to reduce costs and adjust operations are far reaching and will more than offset a likely slowdown in European car production in the second half of 2010.

Moody's said it still expects the phase out of government-sponsored scrapping schemes to have a negative impact on car production volumes in Europe, leading them to decline by about 10% in the second half of 2010 year-on-year.

But these incentive-induced market distortions will taper off by the end of 2010, the agency said.

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