Financial services firm Jefferies has revised its outlook for German automotive suppliers, cautioning that the year 2026 is expected to present a challenging operational environment characterized by weak vehicle production, increased competitive forces, and limited opportunities for expanding sales or profit margins.
In a detailed analysis, the team led by Vanessa Jeffriess emphasized that automotive suppliers face minimal potential for growth in sales or margin enhancement next year, compounded by supply chain uncertainties and intensifying competition.
The analysts noted that while European Union automotive suppliers have experienced multiple valuation adjustments in recent months, investor sentiment remains fragile. They pointed out that market confidence is heavily contingent on the regulatory actions Brussels may undertake regarding local content mandates.
Within this uncertain framework, Jefferies upgraded its rating for Schaeffler to Buy. The brokerage firm argued that Schaeffler stands out as the optimal choice to withstand a difficult 2026, given its recent share appreciation, which they interpret as signaling the start of a robust long-term revaluation tied to the company's advancements in the humanoid segment.
Jefferies expressed increased confidence in Schaeffler’s distinctive value proposition within the automotive supply chain. The analysts expect the company to capture more than a 10% market share in humanoid technology by 2030, a milestone regarded as significant considering the relatively modest additional investment required.
Further strengths highlighted include Schaeffler’s diversification beyond pure automotive exposure, limited need for incremental capital expenditure, and an anticipated robust earnings improvement. Consolidated EBIT is projected to increase by 56% between fiscal 2025 and 2027, a growth rate that comfortably surpasses that of its industry peers.
The analysts also underscored Schaeffler’s compelling internal efficiency gains, suggesting that the company’s self-help initiatives are more achievable and attractive compared with competitors. They contrasted this with many peers whose cost-cutting strategies heavily depend on research and development budget reductions, which are considered challenging.
Jefferies maintained a more conservative outlook for other companies in the sector. Valeo retained a Hold rating and was described as a less favored option due to its limited exposure outside of the automotive sector, which weakens its resilience against market headwinds.
Despite recent strategic developments that provide a somewhat clearer setup entering 2026, Jefferies sees insufficient momentum within Valeo’s business divisions to justify a significant valuation uplift before 2027.
Aumovio was upgraded from Underperform to Hold, reflecting valuation support and a possibility for improved investor sentiment should margin enhancements materialize. Nonetheless, the brokerage cautioned that the company’s targets appear overly ambitious and that competitive pressures remain substantial, factors that exclude Aumovio from Jefferies’ preferred list.