Volatility has become the defining feature of the automotive world, reshaping the classic relationship between manufacturers and their parts providers. For twenty years leading up to 2019, the EBIT margins of suppliers typically edged out those of the original equipment manufacturers (OEMs) by one or two percentage points. The pandemic, a global chip shortage, soaring raw-material costs and recent hikes in financing rates have turned that balance on its head.
Our team monitors the EBIT margins of the fifteen largest OEMs and a hundred top suppliers, updating the figures each quarter. The data, drawn from S&P Capital IQ and a Bain analysis, form the basis of the trends displayed in the dashboard below.
OEM profit margins tumble after pandemic peak
After reaching an all-time high of 8.5% in 2021, OEM profitability has slumped to an average of 4.3% in the first half of 2026. The drop was especially steep in the fourth quarter of 2025, when the average fell to –2.3% following heavy write-offs related to electric-vehicle (EV) programmes and the cancellation of several US-focused projects. The full-year 2025 figure settled at 2.7%, and although margins improved to 5% in the most recent quarter, the recovery remains incomplete. This marks the eighth quarter in a row that supplier margins have outperformed OEMs, continuing a reversal that started in 2024.
Manufacturers are feeling pressure from multiple angles: persistent price competition, elevated financing costs, and the logistical burden of maintaining parallel EV and internal-combustion portfolios. In response, many OEMs have broadened cost-reduction initiatives, a strategy that inevitably cascades down to their supplier networks.
Regional performance shows divergent paths
Chinese carmakers have managed a steady climb in profitability throughout 2026, buoyed by strong domestic demand and relatively modest EV write-offs. In contrast, European and US headquartered OEMs have navigated a more turbulent course. European margins collapsed to negative territory in the second half of 2025 before modestly recovering this year, while US manufacturers swung from losses at the end of 2025 to a modest positive margin in H1 2026. The primary drag on both regions has been the financial impact of cancelled EV projects and the associated depreciation of related tooling.
These regional disparities underscore how different market dynamics—such as government incentives, supply-chain exposure and consumer preferences—shape the profitability landscape. The contrast also highlights why a one-size-fits-all approach to margin recovery is unlikely to succeed.
Suppliers keep ahead, but challenges linger
While OEMs wrestle with margin erosion, the top hundred suppliers have maintained an average EBIT margin of 7.1% in the first half of 2026. This figure continues an upward trajectory that began in 2022 and keeps suppliers comfortably ahead of manufacturers. Their resilience stems from a mix of pricing power, diversified product mixes and the ability to shift production toward higher-margin components when the supply chain is strained.
Looking forward, the sector faces several headwinds. Escalating trade tariffs, lingering geopolitical uncertainty and the ongoing cost of supporting both EV and conventional line-ups could compress margins further. Both OEMs and suppliers will need to accelerate structural cost measures and preserve disciplined pricing to safeguard profitability in an environment that shows little sign of easing.
