Analysis of the European Automotive Sector After 2026 by Barclays

Barclays' Eye-Catching Analysis of the European Automotive Sector

The British investment bank Barclays has maintained its cautious stance in its analysis covering 2026 and beyond, emphasizing the structural issues in the European automotive sector. The bank noted that current valuations are high, and this situation will lead to adverse effects in the sector.

The Role of Efficiency in Profit Growth

Barclays predicts that the expected profit growth in the 2026-2027 period will largely stem from reducing operational costs and company-wide efficiency initiatives. It highlighted that, alongside strong demand growth, sector players will enter a period where internal improvements will come to the forefront.

Significant Revisions in Stock Ratings

Due to high valuation levels and their forecasts lagging behind market expectations, the bank downgraded the ratings of BMW and Porsche from "equal-weight" to "underweight." However, companies like Ferrari and Volkswagen stood out with an "overweight" rating. Ferrari's more predictable profit growth and strong management performance, as well as Volkswagen's recovery in free cash flow and cost control, influenced these assessments. Additionally, Barclays provided a more positive outlook on Mercedes with an "equal-weight" rating compared to BMW; this decision is based on the company's more robust free cash flow and potential for internal transformation.

Outlook on Suppliers and Truck Manufacturers

Among automotive suppliers, Barclays prefers Forvia and Aumovio, which stands out due to its transformation process and decreasing debt levels, recommending an "overweight" rating for both companies. Regarding truck manufacturers in Europe, they warned that challenging conditions could persist throughout 2026, especially due to ongoing market uncertainties in the U.S. and the impacts of tariffs.