Investing.com -- Goldman Sachs initiated coverage of European automobile stocks with positive ratings on three major manufacturers that it sees outperforming the sector in the coming months.
The investment bank said it preferred luxury automakers over their mass-market peers, citing better cash positions, less organizational complexity, and more upcoming electric vehicle offerings in the sector. The bank set Buy ratings on BMW, Mercedes-Benz, and Ferrari.
Goldman Sachs said it was especially bullish on BMW and Mercedes, describing the two as resilient “all-weather” manufacturers, especially in comparison to the broader sector.
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BMW
Goldman Sachs flagged a bullish outlook on BMW, citing expectations for a multi-year, product-led recovery powered by its Neue Klasse EV platform. The platform is expected to significantly enhance energy density, charging speeds, and manufacturing efficiency. Goldman Sachs emphasized that BMW’s substantial balance sheet strength remains undervalued, pointing to its large net industrial cash position, declining capital expenditure after 2024, and consistent shareholder-friendly capital returns. The company’s strong CO₂ compliance outlook and relative resilience to tariffs and Chinese competition—thanks to flexible global production and higher BEV penetration—further strengthen its position.
In a recent development, BMW has stated it expects flat sales in China for 2026, with growth from its new electric vehicle lineup not anticipated until 2027. The company also acknowledged that manufacturers from China pose a significant challenge to German automakers.
Mercedes-Benz
Goldman Sachs identified attractive upside potential for Mercedes-Benz, driven by the rollout of next-generation EV architectures that stand to simplify platforms, reduce battery costs per kWh by approximately 30 percent, and deliver improved efficiency and range. These advanced platforms enable Mercedes to expand its EV lineup while enhancing profitability as investment spending peaks in 2025 before declining. The luxury automaker benefits from a robust balance sheet, strong free-cash-flow generation, and substantial buybacks and dividends, which Goldman Sachs expects will increase over time. The bank forecast volume growth of around 4 percent in 2026 as new products scale up.
Mercedes-Benz reported a 12% drop in third-quarter car and van sales to 525,300 vehicles, citing difficult market conditions in China and the impact of U.S. tariffs. The company’s CEO also called for more investment to establish a local European battery production industry.
Ferrari
Goldman Sachs flagged a bullish outlook for Ferrari, anticipating that upcoming Special Series models in 2026-27 will drive substantial growth and margin/EPS performance that exceeds consensus expectations. Goldman Sachs suggests that Ferrari’s conservative long-term guidance has created a near-term entry opportunity, despite limited evidence of meaningful residual-value risk from hybrids. The bank highlights Ferrari’s fundamental strengths—pricing power, brand exclusivity, low organizational complexity, and consistent innovation—as factors supporting continued outperformance beyond 2030, even with modest volume growth.
Ferrari reported third-quarter 2025 earnings and revenue that fell short of analyst forecasts, with revenue coming in at $1.77 billion. Separately, JPMorgan initiated coverage on the company with an Overweight rating, citing its robust business model.
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