Berenberg Upgrades BMW to Buy, Downgrades Stellantis Amid Auto Sector Restructuring

Berenberg has upgraded BMW to Buy from Hold while downgrading Stellantis to Hold from Buy, signaling a pivotal shift in the European auto sector. Analysts at the firm believe the industry is moving past a cycle of earnings downgrades and into a new phase defined by cost restructuring, product momentum, and a more favorable regulatory environment.

BMW Upgraded on Cost-Saving Potential

Berenberg raised its price target on BMW to €75 from €69, citing a more stable earnings base following a profit warning in June. The analysts pointed to untapped cost-saving opportunities and improving contribution margins from the company's upcoming Neue Klasse electric vehicle platform as key catalysts ahead of its late-September capital markets day.

Further supporting the upgrade, Berenberg highlighted BMW's robust balance sheet, which held €42.6 billion in automotive net cash as of mid-2026. The firm noted that research and development spending appears to have peaked, which should bolster cash generation and could support a distribution yield of approximately 10% through the business cycle.

Stellantis Cut on Margin, Inventory Concerns

In contrast, Berenberg downgraded Stellantis and slashed its price target to €5.10 from €7.80. The downgrade reflects concerns about weak operating leverage on the company's volume recovery, particularly in North America, where margin improvements lagged shipment growth in the second quarter.

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The analysts have reduced their 2026-28 operating profit estimates for Stellantis by roughly 15%. They warned that with North American inventories approaching 100 days, a period of inventory destocking could become a significant headwind for sales volume.

Broader Sector Shift

According to the Berenberg note, a broader restructuring is underway across the European auto industry, with Volkswagen also making progress on an unprecedented cost-cutting program. While risks from China, overcapacity, and competition persist, the firm sees an accelerating pace of product renewal, with automakers set to refresh about 25% of their portfolios annually from 2026-28, up from 15% over the last decade.

Berenberg maintained its Buy rating on Volkswagen, citing its progress in China. The firm kept Renault, Porsche, and Mercedes-Benz at a Hold rating. Analysts also noted emerging opportunities for auto suppliers in adjacent sectors like defense, data-center cooling, and energy management, which could help offset restructuring costs.