2Q26 Preview: bottoming earnings?

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2Q26 Preview: bottoming earnings?

IdeaMsince early 2024, following falling margins, already at historically low levels for

European OEMs.

Reducing estimates and PTs. Mostly to account for the BMW profit warning, also

reflecting lower China sales for German OEMs. Our estimates are now just slightly

below market expectations (EBIT 5%, EPS 15% below consensus), another symptom

of bottoming earnings.

OEMs: falling sales and margins. We expect -4% YoY unit sales, with flat revenue

and additional margin pressure (5.1%, -46bps YoY). That said, the comparative bar is

already set low for many companies, implying room for YoY margin expansion for

some (Porsche, Stellantis).

APs more mixed. We expect a mixed Q2 across European auto parts, again driven

largely by customer mix and FX exposure, with raw material and Middle East-related

cost inflation an incremental headwind across the group as spot prices have risen

further since Q1. Guidance revisions still look premature for most suppliers, with the

duration of the Middle East conflict remaining the key swing factor for any FY26

adjustments later in the year. However, we would be cautious on suppliers with

higher volume exposure to China as market weakness continues into 2H.

Trucks: Recovery starting to become visible. Across European Truck OEMs, Q2 is

the inflection off the Q1 low, with unit sales gradually increasing as North America's

order recovery starts to drive deliveries. Two defining Q2 themes are Middle East

driven cost inflation, and tariffs that now cut both ways: still an underlying

headwind but tariff-refund recognition could become a temporary profitability

swing factor, as OEMs could book credits, similar to Traton's Q2 pre-release. Iran-