Interactive
As volatility has become the norm for the automotive industry, it has upended traditional profit margin dynamics. For two decades leading up to 2019, automotive suppliers’ EBIT margins were on average 1 to 2 percentage points higher than those of original equipment manufacturers (OEMs). Then came massive supply chain disruptions with the Covid-19 pandemic and global chip shortage, plus higher raw material and energy prices, and now rising borrowing costs and wage bills due to inflation. Automotive OEMs were able to ride out the supply shortage by focusing production on the highest-margin models and raising prices, but suppliers had no such strategic options.
We’re tracking the EBIT margins of the top 15 OEMs and top 100 suppliers worldwide, and each quarter, we publish the latest trends in this dashboard.
Here are some of the key takeaways through the first half of 2026:
- The structural reset of OEM margins continues. Their average recovered to 4.3% in the first half of 2026 after large electric vehicle (EV)–related write-offs and costs from canceled programs by US-exposed OEMs dragged down the average to −2.3% in the fourth quarter of last year and 2.7% for all of 2025. OEM margins have risen in each of the past two quarters (reaching 5% in the most recent period), but it’s still not a full recovery. This year’s 4.3% average trails the 5% posted in the first half of 2025, it’s roughly half the annual peak of 8.5% in 2021, and it lags pre-Covid levels. This marks the eighth consecutive quarter in which supplier margins outperformed those of OEMs, extending the reversal that began in 2024. Intensifying price pressure, persistently high financing and input costs, and the ongoing cost of running parallel EV and internal combustion portfolios are together squeezing margins, prompting many OEMs to expand cost-reduction programs—pressure increasingly felt by suppliers.
- OEM performance varied significantly across regions. Chinese OEMs posted a steady climb in margins through the first half of the year. European- and US-headquartered OEMs navigated a bumpier path, weighed down heavily by EV-related write-offs. European OEM margins compressed or turned negative in the second half of 2025 before partially improving this year. US OEM margins followed a similar pattern, swinging from negative territory in the back half of last year to positive in the first half of 2026.
- Supplier margins remained broadly stable in the first half of 2026, averaging 7.1%—continuing the steady upward trend since 2022 and staying well ahead of OEMs. Overall, suppliers have shown considerably more resilience than OEMs throughout this period.
- When we first warned of a looming “perfect storm” of pressures on automotive margins in 2022, few in the industry were prepared for what was coming. That hurricane of cost, demand, and policy pressures is now in full force. Both OEMs and suppliers have no time to lose to strengthen the resilience of their business models by accelerating structural cost measures and maintaining pricing discipline. Looking ahead, escalating trade tariffs and ongoing geopolitical uncertainty could add another layer of strain, particularly for globally exposed supply chains.