U.S. Autos & Mobility 3Q26 Pre-EPS Musings: a challenged set-up on '27, but for now stocks could be due relief rally

Key takes: 1. '27 macro challenges reinforce US exposure / idiosyncratic opportunity preference, GM / BWA remain preferred; 2. 3Q expect modest beats + maintained guides, with a possible relief rally amid weak ingoing sentiment and relatively low valuations; 3. Focus stocks: Ford (+ve), VC (+ve), DCH (+ve), ADNT (-ve). With investor focus increasingly shifting to 2027, the setup appears challenging: rising inflation, continued China pressure, affordability concerns in the US, and a flat global production outlook suggest another year of limited earnings growth, and our 2027 EBIT/EBITDA estimates are generally below consensus (~5% below on average). BWA and GM remain our preferred names given US exposure and idiosyncratic opportunities, while APTV and VC remain out of favor but offer favorable risk/reward at depressed valuations. We generally expect autos to outperform in 3Q on modest beats with guides maintained.