European automotive suppliers trade body CLEPA has warned that more of its members are forecasting a drop to profitability in 2026. It says one in four suppliers are bracing for a loss-making 2026, according to the spring 2026 edition of CLEPA’s Pulse Check survey. The proportion expecting to make a loss this year is sharply up according to CLEPA's latest survey.
With a growing share of companies expecting losses, the data also shows an emergency shift toward non-automotive sectors as a temporary measure to maintain industrial capacity during “one of the most volatile periods in the sector's history”.
Profitability expectations for 2026 remain weak, according to the CLEPA survey. Some 76% of automotive suppliers expect profitability below 5%, the minimum level required to sustain long-term investments in innovation and industrial capacity. This represents a slight deterioration compared to the Autumn 2025 Pulse Check, where 70% of suppliers reported similar expectations.
Some 24% of suppliers now expect negative profitability (below -1%) in 2026, a sharp rise from 15% in the previous survey. This means that one in four automotive suppliers is preparing for negative margins in 2026, highlighting severe financial strain.
Temporary diversification: safeguarding the automotive core
To navigate what CLEPA describes as a “perfect storm of persistent market uncertainty and margin pressure”, suppliers are adjusting their business strategies.
Some 73% of companies have significantly adjusted their product portfolios, focusing on core platforms, existing low-margin products, or expanding the application of existing technologies. For example, this has entailed the phasing out standardised basic components with limited margins, concentrating investment on key electrification or software-driven platforms, or repurposing automotive technologies such as sensors or power electronics for use in industrial applications.
In parallel, 40% of suppliers report increasing their exposure to non-automotive sectors, including industries such as defence and other adjacent markets.
"Automotive suppliers in Europe are facing a profitability crisis that demands immediate, pragmatic action," says Benjamin Krieger, Secretary General of CLEPA. "This economic volatility has forced an emergency pivot. Diversifying into adjacent sectors should be a temporary, tactical measure to protect our workforce and industrial footprint. The implementation of the Industrial Accelerator Act is more crucial than ever. In the current geopolitical context, strategic autonomy must shift from a distant milestone to an immediate political and industrial priority."
