The automotive sector is leading European equity markets this Thursday, buoyed by encouraging comments from Bank of America analysts regarding the industry's outlook as 2026 approaches.
Around 12:00 pm, the STOXX Europe 600 Automobiles & Parts index was up by 2.2%, compared to a 0.2% gain for the broader pan-European STOXX 600 index.
Shares in Porsche (+4.1%), Mercedes-Benz (+4%), Stellantis (+3.6%), and BMW (+3.5%) were among the morning's top performers.
In Paris, Renault posted by far the largest increase on the CAC 40, climbing 5.3%.
In a sector study published earlier in the day, BofA teams stated they are "optimistic" about European automakers through 2026, explaining that they expect regulatory pressure on the industry to ease, particularly regarding European CO 2 emissions regulations for vehicles.
According to the American bank, a relaxation in the decarbonization trajectory would bring much-needed "flexibility" to the sector.
"The United States is already showing the way, with CO 2 emissions constraints that could disappear entirely," commented the New York-based firm.
"Europe certainly won't go that far, but could well postpone the ban on combustion engine vehicles beyond 2040, an announcement that could come as soon as December 10 or shortly thereafter," BofA added.
"In an extreme scenario, the 2035 reduction targets (which call for a 100% cut in emissions) could be halved," the bank continued.
"This would be a highly significant development for a sector where many stocks already price in the scenario of total disruption," the analysts noted.
In this context, BofA indicated a preference for the less expensive stocks in the sector, while highlighting that the entire industry--from Renault to Ferrari--would stand to benefit from such measures.
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