Global auto conference takeaways: near-term demand resilience remains, while cost and geopolitical risks shift into 2H26 and 2027

Overview

This report summarizes the main management discussions from Deutsche Bank's Global Auto, Mobility, and Robotics conference. The core conclusion is that automotive demand in Europe and the U.S. remains stable in the near term, European order momentum and U.S. demand have not deteriorated materially, and domestic demand in China is soft but exports are strong; at the same time, geopolitical conflict, energy, logistics, raw materials, tariffs, and inflationary pressures are building, making the industry more cautious about earnings risk in 2H26 and 2027. On the supplier side, the main themes are cost pass-through, efficiency gains, capacity rationalization, automation and AI applications, and the search for incremental growth in data centers, defense, energy storage, robotics, and other non-auto markets.

Core views

The report's core views are fourfold: first, the industry backdrop has not deteriorated as quickly as macro forecasts suggested, but visibility is limited, 2Q may remain relatively stable, and the risks are more likely to be deferred; second, pricing room in the U.S. and Europe is limited, so OEMs rely more on model-year changes, product mix, and software/service contributions to support ASP and margins; third, supply-chain cost pressure has expanded from raw materials to logistics, freight, energy, and lower-tier suppliers, with 2026 partially cushioned by hedging and pass-through but potentially greater pressure in 2027; fourth, non-auto businesses and automation are becoming important ways for parts companies to reshape their growth narratives and improve capacity utilization, although most opportunities will take time to materialize.

Analysis framework

The report is based on discussions during the conference with management teams, CFOs, and investor relations heads from multiple OEMs and parts companies, organized along two tracks: industry themes and company-specific cases. At the industry level, it compares trends in demand, production, pricing, costs, supply chains, powertrains, and Chinese exports; at the company level, it distills near-term operations, costs, capex, restructuring, and long-term growth drivers for Aptiv, Aumovio, Autoliv, BorgWarner, Dana, Dauch, Ford, Garrett Motion, Goodyear, and others.

Methodology notes

• Industry cycle trackingConference notes and management discussion framework

  Observe orders, production, prices, costs, and demand visibility through management remarks at the conference.

  This approach is suitable for capturing high-frequency operating changes and management tone, but the conclusions depend on the conference sample and cannot replace a full financial forecasting model.

• Cost pass-through analysisRaw materials, logistics, and energy cost pass-through chain

  Assess whether rising costs can be passed from suppliers to OEMs and then from OEMs to end consumers.

  The report shows that suppliers usually pass higher raw material costs to OEMs with a 3-6 month lag, while pricing room for end consumers in the U.S. and Europe is limited, so margin pressure may appear with a delay.

• Structural growth identificationNon-auto adjacent market expansion framework

  Use the existing IP, manufacturing capabilities, and customer relationships of auto parts companies to enter data centers, defense, energy storage, robotics, and industrial applications.

  This framework emphasizes revenue diversification and higher capacity utilization, but the report also notes that most non-auto businesses are still small and meaningful growth contributions may take 2-5 years to emerge.

Asset mapping & comparison

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

• Global OEMs

  Direct beneficiaries or pressure points from demand, pricing, and powertrain mix

  Strengths

  Near-term demand in Europe and the U.S. remains resilient, and model-year changes, product mix, and software services help support ASP.

  Weaknesses

  It is hard for the U.S. and Europe to fully offset tariffs and inflation through price increases, and end-consumer affordability is limited.

  Comparison

  Compared with Chinese automakers, traditional European and U.S. OEMs face greater export competition and localization pressure.

  Risks

  High oil prices, tariffs, weakening consumer demand, and uncontrolled inventories and incentives could squeeze margins.

• Global auto parts suppliers

  Benefit from stable production schedules, cost pass-through, restructuring, and non-auto expansion, but also absorb raw material and logistics pressure

  Strengths

  Q2 call-off stability has improved year over year, some companies can pass raw material costs through to OEMs, and automation, AI, and capacity rationalization can improve efficiency.

  Weaknesses

  Cost pass-through has a 3-6 month lag, some Chinese project cancellations, underutilization, and restructuring cash outflows weigh on profits.

  Comparison

  Suppliers with non-auto IP, data center, or industrial application entry points have a stronger growth narrative than pure-play auto suppliers.

  Risks

  Hedging roll-offs in 2027, persistent logistics inflation, OEM pricing pressure, and demand downgrades could weaken earnings leverage.

• China export chain

  A revenue tailwind for suppliers from Chinese OEM export expansion

  Strengths

  Chinese automakers are expanding aggressively in ASEAN, South America, and Europe, and export momentum remains strong year to date, with some early shipments likely ahead of expected Brazil tariffs.

  Weaknesses

  China's domestic market remains soft, and price competition may still affect supplier and OEM margin quality.

  Comparison

  Compared with traditional European and U.S. OEMs, the China export chain is more aggressive in growth and global share gains.

  Risks

  Trade barriers, tariffs, overseas localization requirements, and price competition could erode export momentum.

• EV, hybrid, and ICE powertrains

  Changes in powertrain demand structure affect capex and platform life cycles

  Strengths

  Hybrid and ICE demand extends platform life cycles and gives some legacy powertrain and safety-component suppliers a longer cash-flow window.

  Weaknesses

  EV order books and expectations are being revised down, and suppliers need to manage EV investment more carefully.

  Comparison

  Hybrids and ICE look more pragmatic in the near term, while pure EV investment is more cautious than before.

  Risks

  Policy, subsidies, consumer preference, and battery cost changes could once again alter investment priorities.

• Non-auto growth opportunities

  A medium-term option for auto parts companies to expand into data centers, defense, aerospace, energy storage, robotics, and industrial applications

  Strengths

  Existing IP and manufacturing capabilities can be leveraged to improve capacity utilization and reshape suppliers' long-term growth narrative.

  Weaknesses

  Current scale is generally small, and some segments require product completion, deeper commercial relationships, capex, or M&A.

  Comparison

  BorgWarner, Garrett, Aptiv, and others all show different forms of non-auto extension, but their maturity levels vary.

  Risks

  Insufficient certification, capacity expansion, customer acquisition, capital allocation, and execution speed could delay revenue realization.

Key data

• Report date2026-05-22The report cover date is 22 May 2026.
• Near-term industry visibilityAbout 10-12 weeksThe report believes 2Q may remain relatively stable, and the potential risks are more likely to be pushed into 2H26 and 2027.
• IHS production cutAbout -500k in 2026, -1.2 million in 2027, and -800k in 2028IHS's May revision already incorporates a tougher production environment and a more persistent high-oil-price assumption.
• Cost pass-through lagAbout 3-6 monthsSuppliers can usually pass higher raw material costs through to OEMs, but with a time lag.
• Non-auto business monetization cycleAbout 2-5 yearsMost current scale remains small, and more meaningful revenue contributions are expected in the medium term.
• Aptiv non-auto revenueAbout $3bnAptiv said non-auto revenue is currently about $3 billion and will continue to disclose this item.
• Autoliv raw material costTotal incremental cost of about $90m, with about 50% already secured for recoveryThe remaining recovery still requires negotiation, and the net headwind is seen as offsettable by other factors.
• BorgWarner turbo-generator opportunityAbout $300m in revenue expected in 2027The company says demand is not the main issue; the key is certification, capacity, and reaching production at automotive speed.
• BorgWarner capexAbout 4.5% of sales in 2026, including $75m for the North Carolina facilityThis is above about 3% in 2025, and the steady-state level is expected to be around 4%.
• Dana automation cost-savings targetAbout $100m in cost savings in the 2030 planThe company has started rolling out simpler robots and automation in factories and plans to gradually use AI tools to improve efficiency.
• Ford commodity cost pressureAdditional headwind of about $1bn in commodity costsFord is responding through dual sourcing, hedging, fixed-price contracts, and similar measures, while also targeting another roughly $1bn reduction in warranty and material costs this year.
• Ford Energy agreementA five-year agreement with EDF, up to 4GWh per year, with shipments in 2028Ford's total capacity target is 20GWh by the end of 2027.
• Garrett revenue visibilityAbout 60% of revenue in the next few years comes from visibility on already-booked projectsManagement discussed the long-term business outlook through 2035 with investors after analyst day.
• Garrett power/industrial salesAbout $100m in 2025, with low-double-digit growth over the next few yearsGrowth may peak around 2028, then be supported by the ramp-up of E-Cooling compressors.
• Garrett air compressor TAMAbout $2.0bn in 2035The company says its oil-free centrifugal air compressor technology can reduce energy consumption by up to 20%.

Impact & implications

For investors, the signal from the report is not that automotive demand is weakening immediately, but that the timing of industry profit risk is shifting later and the visibility of cost and geopolitical pressure is rising. In the near term, suppliers with cost pass-through power, stable order books, restructuring execution, and optionality in non-auto growth are likely to be more resilient; over the medium term, Chinese export chains, extended life cycles for hybrid and ICE platforms, and components tied to data centers and industrial applications could become structural opportunities. However, if oil prices, logistics, and lower-tier supply-chain inflation remain elevated and end consumers cannot absorb higher prices, margins at both OEMs and suppliers could come under pressure.

Risks

• The Middle East conflict could continue to push up energy, logistics, freight, and lower-tier supply-chain costs.
• Hedging and pass-through mechanisms in 2026 may still cushion pressure, but profit risk could rise in 2027 as hedging levels fall.
• U.S. and European end consumers have limited willingness to absorb price increases, so tariffs and inflation are hard to pass through in full.
• IHS production forecasts have been revised down, and if actual demand worsens, current management claims of resilience could be disproved.
• Soft domestic demand in China, price competition, and export tariff risks could hurt supply-chain earnings quality.
• Normalization in EV demand is leading to downward revisions in order books and investment expectations, and suppliers may face asset utilization and project payback pressure.
• Restructuring, plant closures, labor negotiations, and one-time cash expenditures could weigh on near-term free cash flow.
• Non-auto businesses are still early stage, and if certification, M&A, customer onboarding, or capacity expansion goes poorly, the growth narrative may not materialize.

What to watch

• Whether automotive orders, inventories, incentives, and end-demand in Europe and the U.S. start to weaken in 2H26.
• Whether IHS continues to cut production forecasts and whether management commentary shifts from resilient to cautious.
• The ongoing impact of the Middle East conflict on oil prices, logistics, freight, energy, and supply-chain inflation.
• The speed at which raw material costs are passed through to OEMs, and whether OEMs can absorb pressure through mix, model-year changes, and service revenue.
• The pace of Chinese OEM exports, especially front-loading into ASEAN, South America, Europe, and ahead of Brazil tariffs.
• Changes in the order mix between EVs, hybrids, and ICE vehicles, and whether new EV investments from suppliers need to be shared with OEMs.
• Execution progress on supplier restructuring, plant closures, automation, and AI cost-down projects.
• Order intake, certification, capacity, and revenue recognition milestones for non-auto businesses at Aptiv, BorgWarner, Garrett, Dana, and others.
• Ford's targets for commodity costs, warranty and material cost reductions, and the capacity and shipment pace of Ford Energy.
• Autoliv's raw material recovery, higher value content in India, and share changes among local Chinese OEMs.