Auto Transport Update: Market Insights

Rivian Faces Challenges with New Recall and Cost-Cutting Measures

Rivian, a prominent player in the electric vehicle (EV) market, is encountering several obstacles. Recently, the company issued a recall for approximately 24,214 of its R1S and R1T electric vehicles due to a software defect that could cause the Highway Assist system to misclassify other vehicles. This issue has added to the challenges Rivian is already facing, including the expiration of the $7,500 federal tax credit for EVs at the end of the month. The company has also taken steps to reduce costs by laying off workers as it prepares to launch its next model. These developments have led to a 3.5% drop in Rivian's stock price, bringing it down to $13.48.

Airlines See Stronger Fall Demand Than Summer

Deutsche analyst Michel Linenberg highlights that airlines are experiencing stronger demand during the fall compared to the summer season. According to Linenberg, October is expected to perform better than September, which in turn is expected to outperform August. This trend is supported by booking data and insights from executives at a recent conference. The strong demand for premium travel and a recovery in corporate travel after a slow spring period are key drivers of this shift. However, other segments like main cabin and domestic markets remain sluggish, prompting some airlines to restructure their networks to adapt to these changes.

Amazon Autos Struggles with Used Vehicle Inventory

Despite its launch in 2023, Amazon Autos has not yet reached its full potential, particularly in the used vehicle segment. Davidson analysts Tom White and Wyatt Swanson note that while Amazon partnered with Hyundai for new vehicles, sales through Amazon remain limited. Although Amazon recently announced that dealers could list used vehicles on the platform, the available inventory is still minimal. Most of the used cars listed are from Hertz and participating Hyundai dealers, indicating that the platform is not yet fully operational in this space.

Tariffs Impact Auto Industry, But Not as Severe as Expected

Barclays analysts Dan Levy and Josh Cho express surprise at how well the auto industry has managed despite the imposition of tariffs. They note minimal disruption to production and sales, along with ongoing consumer strength. As a result, Barclays upgraded its sector view on U.S. autos and mobility to neutral from negative. General Motors and Aptiv are seen as particularly well-positioned, with upgrades to overweight from equal weight. GM is expected to benefit from easing EV regulations and pricing resilience, while Aptiv can leverage improved business dynamics and reasonable valuation.

Mercedes-Benz EBIT Improvements Expected by 2027

Citi analysts suggest that Mercedes-Benz could see improvements in EBIT by 2027. However, they highlight that the company’s EBIT margins have declined significantly due to challenges in the Chinese market, volume and pricing declines, U.S. tariffs, and poor performance of previous EV investments. To address these issues, Mercedes is focusing on cost-cutting measures and launching a new S-class model cycle, which could drive improvement in 2027. Citi recommends that Mercedes commit to a fixed annual return and restart buybacks to signal long-term confidence.

BMW Faces Challenges Due to Tariff Delays and China Sales Decline

BMW has encountered difficulties due to delays in signing the EU-U.S. tariff agreement, which has resulted in higher import costs. Citi analysts estimate that this delay could cost BMW around 200 million euros in third-quarter EBIT. Additionally, BMW’s optimistic assumptions about the Chinese market have proven incorrect, leading to a sharper decline in sales and increased dealer compensation payments. Despite cost-cutting efforts and better performance in other regions, concerns about competitiveness in China persist, affecting earnings.

Transat A.T. Navigates Near-Term Headwinds

TD Cowen’s Tim James believes that Transat A.T. should not divert investor focus from its attractive valuation over the next 12 months. While the airline faces challenges such as demand softness and increased competition, its Elevation strategy, debt reduction, and partnerships with Porter Airlines are expected to drive structurally higher earnings despite short-term headwinds.

China Eastern Airlines Faces Profitability Strains

DBS Group Research’s Paul Yong anticipates continued profitability challenges for China Eastern Airlines. Passenger yield pressures, driven by fare wars and competition from high-speed rail, are expected to persist. DBS has lowered its 2025 and 2026 earnings forecasts for the airline and adjusted its target prices accordingly. China Eastern’s shares closed lower, reflecting the ongoing struggles in the market.

Mainfreight Faces Earnings Risks

Forsyth Barr notes that risks to Mainfreight’s earnings are tilted to the downside, potentially prolonging its three-year cycle of profit downgrades. The company’s pretax profit fell by 24% in the first 17 weeks of FY 2026, raising concerns about its ability to meet expectations. Forsyth Barr expects an annual pretax profit of NZ$350 million, which would narrow the year-on-year decline to 4%. Achieving this goal will require better margin conversion and consistent new customer wins.