The global auto conference shows near-term demand resilience, but costs and geopolitical risk may surface later

Overview

This report summarizes the key management discussions at Deutsche Bank's Global Auto, Mobility and Robotics Conference. Overall, the global automotive supply chain's near-term demand appears stronger than the market feared, with European orders and US demand still resilient, and the stability of second-quarter production schedules at parts suppliers improving year on year. But the report also stresses that this resilience contrasts with IHS's more conservative production forecasts; if oil prices, logistics, energy, raw materials, and tariff pressures persist, industry earnings and sales pressure are more likely to emerge from the second half of 2026 through 2027.

Core views

The core views are: first, the near-term US and European auto markets have not materially deteriorated, but visibility is short and risks have not fully played out. Second, pricing pass-through is limited, especially in the US and Europe, where tariffs and inflation cannot be fully transferred to consumers. Third, the Middle East conflict has limited direct revenue exposure for most companies, but cost impacts are gradually passing through energy, logistics, freight, and lower-tier supply chains. Fourth, the global competitive landscape is being reshaped by Chinese automaker exports and localization, creating opportunities for suppliers that follow Chinese OEMs while also forcing traditional automakers to rethink supply chains and pricing strategies. Fifth, EV investment is entering a more rational phase, and the longer lifecycle for hybrid and ICE vehicles is benefiting some legacy businesses. Sixth, suppliers are seeking medium-term growth and margin improvement through non-auto businesses, automation, AI tools, factory optimization, and capacity reductions.

Analysis framework

The report is mainly based on investor meetings held during the conference with automaker, parts supplier, and related industrial management teams, combined with company second-quarter operating feedback, 2026 to 2027 outlooks, IHS production assumptions, cost hedging, and pricing pass-through mechanisms to summarize global automotive demand, costs, powertrains, regional competition, and corporate strategy.

Methodology notes

• Conference minutesManagement discussion synthesis

  Extract common trends and company differences through meetings with management teams across multiple companies.

  The report consolidates discussions from Aptiv, Aumovio, Autoliv, BorgWarner, Dana, Dauch, Ford, Garrett Motion, Goodyear, and others to assess demand, costs, and strategic direction in the auto industry.

• Industry supply-demand analysisProduction and order visibility comparison

  Compare near-term management feedback with third-party production forecasts.

  Management generally reported stable second-quarter conditions, while IHS has already lowered its 2026 to 2028 production forecasts, indicating the market is pricing in second-half and 2027 risks more cautiously.

• Cost pass-through analysisHedge, lagged pass-through, and pricing elasticity

  Assess whether raw material, energy, logistics, and tariff costs can be passed through to OEMs or end consumers.

  Suppliers can usually pass part of the raw material cost increase through to OEMs, but there is a 3 to 6 month lag; automakers' price increases to consumers are constrained by demand elasticity, competition, and inventory levels.

• Strategic themeAdjacent non-auto growth

  Use existing IP, manufacturing capabilities, and customer relationships of auto suppliers to enter new end markets.

  Suppliers discussed opportunities in data centers, aerospace and defense, energy storage, industrial cooling, air compressors, humanoid robots, and more; most are still early, but they could improve the medium-term growth narrative.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Global OEMs

  The report directly discusses European and US orders, US price pass-through, China competition, and model-year changeovers.

  Strengths

  European order momentum is solid, some US demand segments remain stable, model-year changeovers and product mix can naturally lift ASP, and software and services revenue helps profits.

  Weaknesses

  Tariffs and inflation are hard to fully pass through to consumers, and pricing elasticity plus incentive management constrain room for price increases.

  Comparison

  Management's near-term feedback is stronger than IHS's conservative revisions to 2026 to 2028 output.

  Risks

  Higher oil prices, softer consumer demand, tariffs, inventory overhangs, and output downgrades in the second half of 2026 and in 2027.

• Global auto parts suppliers

  The report covers suppliers such as Aptiv, Aumovio, Autoliv, BorgWarner, Dana, and Dauch in depth.

  Strengths

  Second-quarter call-off stability improved year on year, some raw material costs can be passed through to OEMs, automation and capacity optimization can improve margins, and non-auto businesses provide a new growth narrative.

  Weaknesses

  Cost pass-through usually lags by 3 to 6 months, pressure may rise after energy and raw material hedges roll off in 2027, and some companies still face restructuring cash outflows.

  Comparison

  Suppliers with exposure to data centers, industrial, defense, energy storage, and China export customers have more medium-term optionality than companies with pure traditional auto exposure.

  Risks

  OEM output cuts, delayed cost compensation, union negotiations, insufficient plant utilization, and slower-than-expected commercialization of non-auto businesses.

• China OEM export chain

  The report treats Chinese automaker global expansion as a key industry dynamic.

  Strengths

  Chinese automakers are expanding aggressively in ASEAN, South America, and Europe, and year-to-date exports are strong; front-running Brazil tariffs may accelerate shipments.

  Weaknesses

  Domestic demand in China is soft, and suppliers must adapt to localization and price competition pressures.

  Comparison

  Compared with traditional automakers, Chinese OEMs are more aggressive in export expansion and cost competition.

  Risks

  Tariffs in target markets, trade policy, localization requirements in Europe and South America, price wars, and supply-chain restructuring.

• EV and powertrain-related assets

  The report discusses EV normalization and longer hybrid and ICE lifecycles.

  Strengths

  After EV expectations were revised down, capital spending in the industry is more rational, and longer lifecycles for hybrid and ICE platforms benefit traditional parts orders and capacity utilization.

  Weaknesses

  EV-related orders and investments are being re-evaluated, and incremental investment often requires cost sharing with OEMs.

  Comparison

  Relative to a pure-EV expansion narrative, hybrid and ICE resilience stood out more in this conference's feedback.

  Risks

  Slower consumer adoption shifts, policy changes, lower EV investment returns, and uncertainty around powertrain technology direction.

• Non-auto adjacent business themes

  Multiple suppliers discussed opportunities in data centers, aerospace and defense, energy storage, industrial cooling, air compressors, and robotics.

  Strengths

  They can leverage existing IP, manufacturing capabilities, and customer relationships to expand revenue sources and improve capacity utilization and the growth narrative.

  Weaknesses

  Most businesses are still small today, full-system capability may require investment or M&A, and revenue contribution usually becomes more visible only in 2 to 5 years.

  Comparison

  Aptiv already has about $3 billion in non-auto revenue; BorgWarner and Garrett provide more concrete revenue paths in data center, industrial, and energy-related applications.

  Risks

  Certification cycles, capacity expansion, customer order conversion, M&A execution, technology fit, and capex returns.

Key data

• Report date2026-05-22The document date is 2026-05-25, while the body date is 2026-05-22.
• Near-term industry visibilityabout 10 to 12 weeksThe report argues that second-quarter performance may be stable, with risks more likely to be pushed into the second half of 2026 and 2027.
• IHS production forecast cutroughly 500,000 units lower in 2026, roughly 1.2 million units lower in 2027, and roughly 800,000 units lower in 2028IHS assumes oil prices and cost pressures last longer, which contrasts with management's near-term resilience feedback.
• Supplier raw material pass-through lagabout 3 to 6 monthsSuppliers can usually pass through higher raw material costs to OEMs, but there is a time lag.
• Aptiv non-auto revenueabout $3 billionAptiv says its non-auto business is a leader among suppliers, but it has not yet made a meaningful contribution relative to its light-vehicle business.
• Autoliv raw material cost increaseabout $90 million gross, with roughly 50% recovery already securedThe remaining recovery still requires negotiation, and the company believes the net headwind can be offset by other factors.
• Autoliv India content value per vehiclecurrently about $150 to $155, and could reach about $170Growth is driven by local safety regulations and higher content value.
• BorgWarner turbo generator revenue targetabout $300 million in 2027The company is more supply constrained than demand constrained, and it will assess further capacity expansion in the second half.
• Ford commodity cost pressurean additional about $1 billionFord is responding through dual sourcing, hedging, and fixed-price contracts, while also pushing down warranty and material costs.
• Ford Energy agreementa five-year agreement with EDF for up to 4 GWh per year, with shipments starting in 2028Ford's total capacity target is 20 GWh by the end of 2027.
• Garrett long-term visibilityabout 60% of revenue in the coming years comes from already booked programsThe company is planning turbo, zero-emission technologies, and commercial and industrial applications through 2035.
• Goodyear second-quarter sales decline driversabout one-third from SKU rationalization and about two-thirds from channel destocking and price competitionThe company continues to emphasize pricing discipline and North American capacity optimization.

Impact & implications

For investment implications, the report supports a 'not bearish in the short term, selective in the medium term' view of the sector. Near-term demand and order resilience help ease concerns about second-quarter earnings, but oil prices, tariffs, logistics, raw materials, and the 2027 hedge roll-off could compress margins. For automakers, it is harder to pass through price increases directly, and earnings support will come more from product mix, software services, and cost control. For suppliers, those with exposure to China export customers, benefits from extended traditional powertrain lifecycles, non-auto adjacent opportunities, automation cost-cutting capabilities, and disciplined capital allocation are more likely to receive medium-term valuation support; however, most non-auto businesses still need time to prove themselves and should not be counted as meaningful growth contributions too early.

Risks

• The Middle East conflict continues to push up energy, logistics, freight, and raw material costs.
• Cost pressure may become more visible after energy and raw material hedges weaken in 2027.
• Persistently high oil prices could weaken consumer demand and make the IHS production downgrade scenario play out.
• US and European automakers cannot fully pass tariffs and inflation through to end consumers.
• Soft domestic auto demand in China and intensifying global price competition.
• Non-auto business commercialization is slower than expected and cannot offset the pressure in the core auto business in the short term.
• Plant closures, restructuring, union negotiations, and one-time cash outflows hurt profits and free cash flow.
• Uncertain EV returns and powertrain mix changes lead to capacity mismatches.

What to watch

• Whether US and European auto orders and parts call-offs weaken from their current resilience in the second half of 2026.
• Whether IHS continues to cut production forecasts, especially its 2027 production assumption.
• Whether oil prices, logistics, freight, and raw material costs break through companies' hedge and pass-through capacity.
• Whether OEMs can maintain ASP through model-year changeovers, mix improvement, inventory, and incentive management.
• The persistence of Chinese OEM exports into Europe, South America, and ASEAN, and the tariff impact in markets such as Brazil.
• The outcome of supplier and OEM negotiations on 2027 pricing pass-through and cost compensation.
• The order flow, revenue recognition, and capex cadence for non-auto businesses at Aptiv, BorgWarner, Garrett, and others.
• The actual cost savings from capacity closures, automation, and AI tools at auto suppliers.
• The production ramp-up milestones for Ford Energy, BorgWarner turbo generators, Garrett industrial cooling, air compressors, and similar new businesses.