The US auto market remains strong. Why does Nomura endorse GM’s cautious outlook?

  • Nomura expects US auto demand to remain stronger than in other markets in the near term, but endorses General Motors’ assumption of approximately 16 million vehicles in seasonally adjusted annualized sales for the rest of the year. Some observers consider that forecast conservative and below the performance of recent months. Nomura’s reasoning is that actual demand has consistently exceeded the level implied by macroeconomic indicators, especially since early 2026, and the recent strength in sales may not last.
  • Persistently high gasoline prices and a marked decline in the wholesale used-car residual value index support a cautious assessment. However, the index may fall because used-car prices decline or because manufacturers’ suggested retail prices for new cars rise, so Nomura also avoids being overly pessimistic.

Some markets show resilient demand. Why are full-year global sales still expected to decline?

  • Nomura forecasts global auto sales of 91.03 million vehicles in 2026, down 0.9% year on year. Excluding China, it forecasts sales of 64.51 million vehicles, up 0.8%. The opposite directions show that its full-year assessment includes marked regional divergence rather than a synchronized weakening across markets.
  • China is a major drag: Nomura forecasts sales of 26.52 million vehicles in 2026, down 4.9% year on year. This measure uses registrations for passenger vehicles and wholesale volumes for commercial vehicles, unlike the China wholesale data in the monthly tracking table, which include exports.
  • Motorcycle markets in emerging economies remain relatively strong, with no signs of a slowdown yet, but the macroeconomic environment makes the outlook difficult to assess. Nomura therefore identifies the sales outlook for major auto and motorcycle markets as an important point to watch this earnings season.

Raw material prices are high. Why could first-half profits still beat expectations?

  • Using a standard passenger car as its benchmark, Nomura assumes automakers’ input costs per vehicle will rise by about 10 thousand yen year on year, and considers this cost assumption more cautious than the market consensus earnings forecast. Alongside support from sales volumes, higher unit costs directly constrain profit on each vehicle.
  • Cost pressure and current-period profits do not move entirely in sync, however: automakers use different methods to account for input costs per vehicle. Based on input price trends as of the report date, Nomura believes first-half earnings for the fiscal year ending in March 2027 could be stronger than market participants had previously estimated. That view can coexist with its cautious stance on cost levels.

European local manufacturing requirements: Why is Mazda more exposed?

  • France and Germany backed the EU automotive policy package and the Industrial Accelerator Act on 16 October. The package includes final assembly within the EU in its European manufacturing rules and requires electric and zero-emission vehicles to be produced in Europe to qualify for tax incentives. Certain European countries, including the UK and Norway, can qualify subject to conditions, while Japan is excluded.
  • If the package takes effect in its current form in January 2028, Nomura believes Mazda will be negatively affected: Europe accounted for 13% of its global sales in the fiscal year ending in March 2026, but the company has no local production facilities. Toyota and Nissan, which have plants in Europe, could also be affected to some extent, depending on eligibility for incentives and production-location requirements.