** Jefferies says diversified car parts suppliers continue to face challenges, including from Chinese competition and higher R&D spending, leading to volume and cost headwinds
** The broker assumes coverage of four suppliers, rating Forvia FRVIA.PA and Autoliv ALV.N, ALIVsdb.ST as "buy", Schaeffler SHAn.DE and Valeo VLOF.PA as "hold"
** If Chinese supplier penetration in Europe grows in line with the forecast Chinese OEM production, European suppliers' revenue streams could fall by more than 10% by 2030, it says
** Competition risk is the highest to Valeo's European sales and the lowest to Schaeffler, it says, while Forvia's European partnership with Chinese BYD "provides comfort"
** "The mix impact from newer tech will likely cap margins below prior levels, but there are opportunities from restructuring/AI" - Jefferies
** Autoliv does not have the same level of risk related to the EV transition or Chinese competition, it adds
** While Schaeffler has potential to double its EBIT by 2027, the execution risk is not negligible, Jefferies says
** Forvia has material potential due to underperforming businesses, while for Valeo the mindset change needed to cut high R&D spend seems more challenging, it says
(Reporting by Amir Orusov)
((Amir.orusov@thomsonreuters.com))
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