Automotive suppliers sustain margins amid slower growth in 2025

This last edition of BriefCASE for 2025 breaks down how automotive suppliers have navigated growth, margin pressures and market shifts across regions. 

Automotive component suppliers demonstrated resilience during the first nine months of 2025 (Jan.–Sept.), navigating a period of moderating top-line growth while effectively enhancing profitability compared to the strong performance in the corresponding period of 2024. Although overall revenue growth decelerated from the double-digit pace observed earlier, the industry managed to expand its collective operating margins, reflecting a strong focus on operational efficiencies and cost management amid a cautious global market.

Aggregate revenue for the top‑50 listed automotive suppliers rose from around $441 billion in Jan.–Sept. 2024 to around $448 billion in Jan.–Sept. 2025—an increase of about $6.8 billion. On an unweighted basis (each supplier contributing one observation), the average percentage change was +2.40%, and about 66% of automotive suppliers grew year‑over‑year, reflecting positive revenue growth trends. These results point to modest but broad‑based expansion, with growth not overly concentrated in a handful of firms. The average revenue per automotive component supplier rose from $8.83 billion to $8.96 billion, reinforcing that typical firm-level expansion was modest but broad.

Regionally, average margins of automotive suppliers in the US and Canada rose across the board: Gross margin increased 0.34 percentage points from 14.87% in Jan.–Sept. 2024 to 15.20% in Jan.–Sept. 2025, EBITDA margin improved from 10.31% to 10.64%, EBIT jumped from 5.91% to 6.20% and net income margin rose from 3.36% to 3.66%. Improvement breadth was strongest in gross margins (~73% of automotive suppliers reported growth) but more mixed at operating levels (~45% improved EBITDA/EBIT), implying some dilution between gross and operating tiers for a subset of automotive suppliers.

In Europe, average gross margin rose 0.50 percentage points to 19.05%, EBIT was broadly stable at 5.31% with ~80% improving, but net income margin jumped 3.03 percentage points y/y to 5.36% despite only ~50% improving, indicating that a few large positive moves lifted the average. Interestingly, EBITDA’s average dipped slightly, from 10.10% to 9.85% even though ~70% improved—meaning a minority experienced sizable declines that pulled down the mean.

In Asia-Pacific, improvements were the most uniform: Average gross margin improved nearly 1 percentage point to 18%, EBITDA was up 0.68 percentage points to 10.54%, EBIT improved 0.55 percentage points to 6.26% and net income margin rose 0.22 percentage points year-over-year at 4.53% with ~64–79% of automotive component suppliers seeing gains. This pattern points to consistently successful pricing/mix and cost programs across the region.

As the automotive industry heads into 2026, automotive suppliers face a complex mix of opportunities and challenges driven by global megatrends. Although demand for electrified and software-defined vehicles continues to accelerate, the path to profitable growth is anything but straightforward. 

We expect intense competition to persist into 2026, driven by structural adjustments, trade barriers and ongoing pressure on volumes. Automotive suppliers anticipate that tariff impacts and currency fluctuations will remain influential risk factors, while overall sales growth is likely to be modest or flat, with gradual improvement as electrification scales, production normalizes and cost-control measures take hold. Across the industry, the focus will center on margin recovery through lean restructuring and operational efficiency initiatives.

For 2026, our automotive industry analysis points to the following three themes, which have been widely highlighted in the official communications of top automotive component suppliers.  

1. Electrification as the core growth engine for automotive component suppliers

Demand for battery-electric and hybrid platforms remains robust, driven by OEM commitments and regulatory mandates. Automotive suppliers specializing in power electronics, battery systems and lightweight materials will see strong order pipelines. However, scaling EV-related production is capital-intensive, requiring disciplined investment and cost control. Beyond hardware, software integration for ADAS and connectivity is emerging as a critical differentiator, pushing traditional automotive component suppliers toward tech-enabled solutions.

2. Supply chain localization for regional resilience

Geopolitical uncertainty and lessons from pandemic-era disruptions are accelerating near-shoring and sourcing diversification. While supply chain localization enhances resilience, it raises short-term costs due to duplicated capacity and higher labor expenses in developed markets such as North America and Europe. Strategic partnerships and modular manufacturing will be essential to maintain flexibility without eroding margins.

3. Managing materials cost volatility

Raw material price swings—particularly in steel, aluminum and battery-grade minerals—continue to pressure profitability. Automotive component suppliers are responding through long-term procurement contracts, hedging strategies and increased use of recycled materials. The ability to pass through cost increases to OEMs remains uneven, making margin management a top priority.

Looking forward: Innovation and efficiency remain vital for automotive component suppliers

For established automotive suppliers, competitive intensity is rising as new entrants—particularly from the Asia-Pacific region—expand their footprint in the electrification and software domains. Established automotive suppliers must innovate faster while maintaining operational efficiency to defend market share. Automotive suppliers enter 2026 with strong structural tailwinds from electrification and digitalization, but success will hinge on mastering supply chain localization and resilience, mitigating input cost volatility and executing technology pivots without compromising financial discipline.

Disclaimer: 
This analysis—on top 50 listed automotive suppliers by revenue—incorporates financial data for the first three calendar quarters of 2025 and 2024. For consistency in cross-border comparisons, all supplier revenues have been converted to US dollars. A limited number of companies within the cohort do not disclose quarterly revenues; for these entities, estimates have been derived from publicly available projections and first-half results. All revenue and margin figures represent simple averages across the top 50 listed automotive suppliers and are calculated on an unweighted basis.