European automotive equities are trading at multi-year lows, with major names including Renault, Stellantis, and Ferrari significantly underperforming the broader European market over the past two years.
While indices such as the STOXX 600 have reached new highs this year, the auto sector has endured a prolonged period of weakness, raising questions among investors about the sustainability of the sell-off.
Analysts at IG France suggest the sector may have reached a point of exhaustion, describing the current valuation levels as offering significant potential for a rebound.
The divergence between the auto sector and the wider market has widened, with auto stocks failing to participate in the broader equity rally that has characterized the first half of 2026.
The underperformance contrasts sharply with the tire manufacturing segment, where companies like Michelin, Pirelli, and Continental have posted gains year-to-date.
This split highlights a rotation within the automotive supply chain, with suppliers benefiting from steady demand while OEMs face margin pressures and shifting consumer preferences.