Broker snap: Market conditions improve for Inchcape

16th Apr 2010 13:33

A better performance by Toyota in the US in March suggests that the accident prone Japanese car manufacturer's reputation in other regions may be on the mend, which should be good news for car dealer Inchcape. "While Inchcape is not exposed to the US market, this was where the product recall stemmed from and likely to have the largest impact for the value of the Toyota brand. We have also not seen anything significant movement in residual values in Toyota to suggest any brand damage here either. Elsewhere in Europe and the rest of the world, Toyota appears to be doing a very good job in at least maintaining market share," Panmure Gordon suggests.The broker is bumping up its Inchcape target price from 34p to 42p, despite its suspicion that "trading in Singapore remains tough". On the plus side, "the declines seen in Russia are below previous expectations, with strong momentum appearing to continue apace in Hong Kong and Australia," the broker notes."We note major US motor retailers such as AutoNation and Penske have raised guidance recently, which could be a sign that the global automotive market is picking up," the broker speculates. The broker's 'buy' recommendation is maintained.