Global Autos: 2026 Outlook (2/3) – US Picks & Pans
Todd Duvick, CFA - Head of Autos, CreditSights
Jim Williamson - Senior Analyst, Autos, CreditSights
Will Lee - Analyst, Autos, CreditSights
Jack Hird - Analyst, CreditSights
22 December 2025
Insights into Global Autos: 2026 Outlook (2/3) – US Picks & Pans, including:
- US IG Autos maintain market perform outlook: Meanwhile, sequential profitability improvements expected despite spreads remaining elevated versus broader corporate indices.
- US HY Autos face underperformance headwinds: However, rich valuations and flat production volumes constrain near-term upside potential significantly.
- Ford, GM, Aptiv emerge as investment grade picks: Additionally, tariff mitigation strategies and liability management exercises support compelling relative value opportunities.
- Honda, Magna, Allison face underperform recommendations: Therefore, margin pressures and leverage concerns outweigh fundamental strengths across these credits.
- Relative value drives credit selection framework: Consequently, spread premiums and rating stability expectations determine optimal positioning within automotive sectors.
Executive Summary
This report examines relative value across OEMs and automotive suppliers. Moreover, it identifies credits with strong fundamentals alongside those facing challenges.
OEM profitability should improve sequentially through tariff relief and cost mitigation initiatives. However, profit margins will remain below pre-tariff levels despite regulatory policy changes.
Global production volumes are expected to remain flat throughout 2026. Additionally, rich valuations and program reorientation costs may limit near-term sector upside.
The analysis covers both investment grade and high yield automotive credits. Furthermore, it evaluates relative value opportunities across major OEMs and suppliers.
Part 1 was published December 17, 2025, covering fundamental industry outlook. Specifically, it discussed production trends, demand dynamics, and electrification megatrends.
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