Barclays has shifted its stance on two leading German automakers, downgrading Mercedes-Benz to "underweight" while upgrading Porsche to "overweight," reflecting changing market dynamics. Mercedes-Benz faced disappointing Q3 results, with its operating margin falling below expectations due to declining prices, increased dealer incentives, and EV clearance costs. The automaker's challenges are compounded by softening sales in China and the U.S., alongside stringent EU CO2 regulations. Barclays now projects reduced margins for 2025-2026, maintaining a cautious outlook despite the company's efficiency plans.
Conversely, Porsche's upgrade highlights its improved growth potential, driven by robust pricing power and new models like the E-Macan and 911 GTS. Barclays forecasts over 10% annual EPS growth for Porsche in 2025-2026, emphasizing its cost efficiency and brand loyalty as competitive strengths.
Barclays also upgraded its view on European auto suppliers, seeing stabilization in costs and earnings expectations, with companies like Continental and Forvia poised for recovery. Despite risks from potential U.S./Mexico tariffs and global uncertainties, analysts expect improved operational frameworks and cash flows in 2025.
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