Light vehicle (LV) production is adjusting to a weaker demand environment. LV sales are catching up in both the U.S. and European sectors this year, but we believe will lose momentum from 2024. China no longer drives global growth. We note more pronounced pricing risk in the volume market while competition increases. Electric vehicle (EV) penetration is increasing, but progressing unevenly in Europe; the EV inventory is increasing in the U.S. We see mixed effects and orderbooks delaying profitability pressure, but the combination of softer pricing and increasing electrification in lower segments will contribute to some margin erosion. Suppliers are struggling to bridge the profitability gap amid sustained portfolio repositioning. We believe redesigned incentive schemes or tariff barriers will counter the Chinese EV offensive in Europe. We see some headroom in ratings to absorb slower growth and weaker pricing, but the rating cushion could vanish amid tougher market conditions.