"According to JPMorgan, Global Players in the Automotive Sector Will Continue to Gain Market Share"

JP Morgan has outlined its 2025 outlook for the European automotive sector, predicting a mere 1% increase in global car production year-on-year and a 2% decline in Europe. The firm anticipates that globalization will continue, spurred by developing global players like Tesla, BYD, and SAIC gaining market share across regions. The trade tensions among Europe, China, and the U.S. are expected to be prominent in 2025, alongside a slower-than-expected transition to electric vehicles globally, with Chinese OEMs predicted to capture market share in all regions except the U.S.

JP Morgan expects investors to continue seeking companies that generate strong free cash flow (FCF) and engage in dividend payments and share buybacks, likely focusing on OEMs, truck manufacturers, and tire companies. Among truck OEMs, JP Morgan has upgraded Volvo from “neutral” to “overweight” and increased the rating for Daimler Truck to "overweight," while maintaining “neutral” ratings for Traton and Iveco.

Anticipating that Stellantis' restructuring will gain momentum in 2025, JP Morgan has retained an "overweight" rating for Renault due to its strong product portfolio and benefits from restructuring, along with other OEMs. The firm argues that automotive suppliers will focus on cost-cutting measures to improve earnings and cash profiles, with Forvia, Continental, and Pirelli rated as top picks under the "overweight" category.

Schaeffler, Dowlais, Gestamp, Aston Martin, and Michelin (EPA:MICP) have remained at a "neutral" rating.