OREANDA-NEWS. November 30, 2015.  Fitch Ratings says the outlooks for European automotive manufacturers in 2016 are both stable for the sector and for issuer ratings. This reflects our expectations for a modest increase in global new vehicle sales, including further growth in Europe, leading to a further small improvement in key credit metrics in 2016. It also reflects uncertainties about sales development in several large emerging markets and a potential gradual hike in investments and capex, notably related to powertrain development.

Earnings have strengthened in the past couple of years and we expect the European auto sector's aggregated operating margin to increase only modestly in 2016 from our projections of about 6.5% in 2015 and 5.6% in 2014, excluding exceptional items from the Volkswagen crisis. We also expect the sector's combined free cash flow to remain positive in 2016. In addition, the sector's overall liquidity remains healthy and we expect key credit ratios to remain strong in 2016.

For more information on Fitch's expectations for the sector in the coming year, see "2016 Outlook: European Automotive Manufacturers" on www.fitchratings.com or by clicking the link above.