US truck cycle improves: upgrade Tupy to Neutral; Keep lochpe at Underperform

Research evidence excerpt

US truck cycle improves: upgrade Tupy to Neutral; Keep lochpe at Underperform

Accessible version

Brazil Auto Parts

US truck cycle improves: upgrade Tupy to

Neutral; Keep Iochpe at Underperform

Rating Change

Inflection point ahead after persistent market downturns 18 June 2026

We upgrade Tupy to Neutral from Underperform. We kept the stock at U/P since Sep- Equity

2022 as multiple market downturns pressured Tupy’s earnings. Now, however, we see a Brazil

potential inflection as the US truck cycle improves and the Brazil truck market stabilizes. Brazil Auto Parts

Therefore, we think Tupy should see momentum turn in 2H26. Thus, we prefer Tupy’s Gabriel Frazao >>

risk-reward over Iochpe (maintained at Underperform) given the potential for a stronger Research Analyst

recovery in profitability and lochpe’s German antitrust investigation risk. Moreover, we Merrill+55 11Lynch2188 (Brazil)4252

see corporate governance risk declining after the appointment of Harro Bruman as CEO gabriel.frazao@bofa.com

and as Tupy announced it will advance a structured governance enhancement project, Rogerio Araujo >>

including eligibility criteria for Board and Executive Management members. ResearchMerrill LynchAnalyst(Brazil)

+55 11 2188 4255

US truck production recovery to support momentum rogerio.araujo@bofa.com

US truck orders have been improving since December/2025, supported by higher spot

freight rates and greater clarity on EPA 2027 regulations (see our report: Truck orders

Exhibit 1: Tupy summary changesvery strong). Given the typical production lead time of 4-6 months, we expect stronger

Tupy old vs neworders to start flowing to Tupy and Iochpe’s P&L over the coming quarters. As a

reminder, US trucks were c15% of Iochpe’s and Tupy’s revenues over the last 5 years. Tupy New Old Diff. (%)