The upcoming third-quarter reporting will see “production discipline” in the automotive sector, according to BofA Global Research.

Original equipment manufacturers (OEMs) are projected “to print good results” as “demand and pricing remained solid,” analysts say in a note seen by Kallanish.

Still, global production volumes are under pressure, with BMW and Mercedes warning about China weakness, Stellantis downgrading its North America shipment plans lower for the second half of the year, and Volkswagen mulling the closure of plants in Europe.

Supplier results “should be pressured as production schedules have slipped and we expect guidance revisions to accompany results,” they note. Suppliers do not benefit from strong pricing to the same extent as OEMs, Kallanish learns.

GM and Ford are expected to report solid quarters, as industry data suggests robust pricing and mix. Indeed, even though September saw a spate of negative OEMs announcements and profit warnings, the only negative update in North America came from Stellantis.

Among pure-play EV makers, Tesla’s deliveries in the period were also solid, but price discounts may add pressure compared to Q2. Meanwhile, Rivian’s setup appears to be “volatile,” analysts comment, after the car manufacturer admitted to production hiccups amid supply disruption of key components, which can threaten its positive gross margin target.

Competitor Lucid beat market expectations with its Q3 deliveries, but sales discounts could hurt the bottom line, they add. 

For suppliers, results are projected to be subdued amid soft production volumes, with volatility in North America and Europe likely affecting Q3 performance. 

Pressure could increase on companies such as Adient, Lear Corporation, and Visteon Corporation, which are exposed to BMW, Mercedes, and the Chinese market. 

“We believe that this incremental pressure will have a larger impact in 4Q24 and possibly 1Q25 rather than 3Q24 since by mid-September a large part of the quarter was behind for suppliers,” the analysts conclude.