Automotive, demand still weak and scenario uncertain

The automotive industry is bracing itself for another year of headwinds. Compared to 2025, tensions over tariffs should (but the conditional is a must) ease, but demand remains weak and the outlook is still cautious, with downside risks in all three key global markets, i.e. the US, Europe and China. This emerges from S&P Global Ratings' Outlook 2026. "Manufacturers," explains Vittoria Ferraris , S&P Ratings' Emea sector leader, "show satisfaction with an agreement that is an improvement on the premise, but the ability to pass on the additional cost to prices is hampered by consumers' accessibility to an inflated market," at a time when, among other things, revisions to Ev strategies, following the regulatory corrections decided by the White House, risk impacting margins and, above all, cash flows. Just yesterday, in this regard, Volkswagen announced that it had closed 2025 with a cash flow in excess of forecasts, thanks to the postponement of projects and investments linked to the strategic revision.The cash flow of the automotive sector was 6 billion, exceeding the initially forecast breakeven. This increase brought net cash to over 34 billion, compared to about 30 billion expected. The stock gained 5.97% in Frankfurt.

In Europe, however, competitive pressure will only increase, according to S&P, even downstream of the new EU-China platform agreement on minimum prices. For Ferraris, 'it makes sense, at this stage, to negotiate with Chinese producers and try to bind the market to regulated pricing behaviour'. In general, then, the regulatory constraints for 2030 have changed only marginally and continue to put pressure on producers. 2026 will also be the year in which new products capable of competing on the price levels of the Chinese will make their debut but, despite this, the conviction is that the Oriental market share, which rose to 7% in 2025, will continue to grow: 'in the long term,' Ferraris explains, 'a further increase towards double figures is expected'. China, finally, "remains a challenging market" even though, "in the market segment where European manufacturers operate, there should be no major changes," Ferraris explains. Instead, competition will mainly concern Chinese operators, with pressure on prices and the reduction of subsidies, which will negatively affect demand. In general, for deliveries, the expectation is for a flat 2026, but not a declining one. 'Already 2025 closed at acceptable levels, considering expectations,' Ferraris concludes. 'Stability should also continue in 2026, the only real unknown from this point of view being US demand.