Geopolitical tensions and slowing demand are undermining global automobile production, which is expected to contract by 1.2% in 2026, indicates a study by Crédito y Caución. The most immediate and disturbing measure are the 15% tariffs imposed by the United States on major partners such as Japan, South Korea and the European Union, which make exports more expensive and alter trade flows.
In Europe, the recovery is tenuous. After contractions of 5.1% in 2024 and 2% in 2025, European production is only expected to grow 1.6% in 2026, in a scenario of depressed domestic sales due to lower household spending on high-value goods.
The transition to electric vehicles weighs additionally: between January and August 2025, only 15.8% of new registrations corresponded to electric vehicles, highlighting weak European competitiveness in this strategic segment, highlights the study.
The report also recalls that production costs are rising due to uncertainty in the supply of semiconductors and rare earths, as well as new tariffs, forcing manufacturers to review supply chains and investment plans.
The impact is particularly felt in Germany, a heavily exporting market to the USA, as in 2024 the value of German car exports reached 33 billion dollars, but the combination of weak demand, erosion of margins and applied tariffs is expected to lead to a 2.7% drop in German production in 2026.
Financial pressure on the sector increases, increasing insolvency levels, as well as defaults, which are approaching 2024 levels, while banks tighten credit criteria for automotive suppliers, limiting circulating capital and modernization investments, highlights Crédito y Caución.
Still, according to the study, there are windows of opportunity at a global level. Emerging markets with low motorization density and a growing middle class can stimulate demand. Model launches, purchasing incentive policies and decarbonization measures could also boost sales and help the industry offset part of the external shocks. For now, however, the sector is facing a period of readjustment in its chains and technological transition strategy, highlights the report.