Global Autos: 2026 Outlook (1/3) – Fundamentals
Todd Duvick, CFA - Head of Autos, CreditSights
Jim Williamson - Senior Analyst, Autos, CreditSights
Jack Hird - Analyst, CreditSights
Will Lee - Analyst, Autos, CreditSights
18 December 2025
Insights into Global Autos: 2026 Outlook (1/3) – Fundamentals, including:
- Light vehicle demand remains constrained globally: Affordability headwinds persist as sales stay flat despite pricing discipline from OEMs prioritizing margins.
- Regulatory relief supports operational flexibility: Meanwhile, relaxed US CAFE standards and Europe’s modified 2035 targets reduce technology investment pressures significantly.
- Hybrid powertrains emerge as electrification bridge: However, EV adoption stalls in developed markets while hybrids gain share amid expired incentives and consumer preferences.
- Supplier divestitures accelerate balance sheet repair: Additionally, Forvia, ZF, Continental, and Antolin pursue aggressive asset sales to achieve critical deleveraging targets.
- Credit ratings face mixed outlook pressures: Therefore, Stellantis downgrade risk rises while VW, BMW remain defensible despite elevated investment and China headwinds.
Executive Summary
Global light vehicle sales will remain broadly flat in 2026 as affordability constraints persist worldwide. US sales decline approximately 1% to 16.0 million units while Europe shows modest improvement.
OEMs prioritize inventory management and pricing discipline over pursuing aggressive volume growth targets in 2026. Meanwhile, US dealer inventories remain healthy at approximately 50 days supply, supporting stable pricing strategies.
Regulatory relief in US and Europe enhances operational flexibility and profitability for automotive manufacturers. Lower fuel economy standards and relaxed 2035 targets extend higher-margin ICE model lifecycles significantly.
Electrification strategies diverge regionally, with hybrid powertrains increasingly bridging consumer preferences and regulatory requirements. BEV adoption stalls in developed markets while China maintains strong NEV momentum through incentives.
Furthermore, capital markets activity focuses on refinancing €33 billion European and $64 billion US maturities. Supplier M&A centers on divestitures and deleveraging, with Continental, Forvia, and ZF accelerating sales.
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