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Where’s the growth? Legacy automakers face a tougher 2027 as costs rise, market tightens
Several major carmakers are facing weaker outlooks as rising costs and slower production make growth harder to sustain. BMW, Stellantis and Hyundai have cut or constrained profit and sales expectations, while Toyota has raised its forecast, helped by hybrid demand and a weaker yen.
BMW says restructuring will cut its automotive pre-tax margin by 2.5 percentage points this year, with a 3% to 5% target for 2028; its margin was 3.4% in the third quarter. Hyundai lowered its 2026 sales target to 4 million vehicles and its operating-margin range to 5.5% to 6.5%. Toyota raised its full-year operating-income forecast by 500 billion yen, about $3.2 billion, while GlobalData expects global light-vehicle production to fall 2.1% in 2026 and grow by less than 1% next year.
In short
- Rising costs and slower production are squeezing carmakers.
- Hyundai cut its 2026 sales target to 4 million vehicles.
- Toyota raised its forecast by 500 billion yen.
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The case for
The tougher outlook may reflect a difficult transition rather than a failure of the industry: restructuring, investment and higher costs can weigh on profits now while positioning carmakers for future demand. Toyota’s improved forecast, supported by hybrid sales, also suggests that firms with products suited to current buyer preferences can still find growth.
The case against
The cuts and constrained targets suggest the pressure is more than a temporary accounting effect: slower production and rising costs are making growth and healthy margins harder to sustain across several major carmakers. With global production expected to contract in 2026 and grow only modestly next year, investors and workers may reasonably question whether restructuring and existing product strategies will be enough to restore momentum.
Explained simply
Established carmakers such as BMW, Stellantis, Hyundai and Toyota sell vehicles across many countries and compete with one another for buyers. Their results depend on how many cars they can make and sell, what it costs to build them, and how much they earn on each sale.
Car production and demand can vary between regions and types of vehicle, including petrol, electric and hybrid models. A weaker currency can also affect a carmaker’s reported earnings when it sells abroad. These differences help explain why companies can have contrasting prospects even as the overall market changes.
The outlook matters to workers, suppliers, investors and customers because carmakers’ plans can affect jobs, factory output, investment and vehicle prices. The industry is also a major part of many national economies, so changes in production and profitability can have effects beyond the companies themselves.