AlixPartners Releases "2026 Global Automotive Industry Outlook"

NEW YORK, NY – July 7, 2026 – AlixPartners, a global consulting firm (Headquarters: New York, USA; Japan Office: Chiyoda-ku, Tokyo; Representative: Takuro Uechiji), has released its "2026 Global Automotive Industry Outlook" (hereinafter referred to as "this report"). Amidst increasing supply uncertainty and trade risks, the automotive industry is definitively entering its next era, driven by the deglobalization of vehicle architectures and supply chains. Automotive companies face critical challenges that require immediate attention, including rethinking EV strategies, the growing influence of Chinese players, and the transition from Software-Defined Vehicles (SDVs) to AI-Defined Vehicles (AI-DVs).

This year's report, the 23rd edition, forecasts a decline in demand in key markets such as China and the United States in 2026. In China, intensifying domestic competition and "neijuan" (profit erosion due to excessive competition) are accelerating, leading Chinese manufacturers to actively seek growth in overseas markets.

The main points of this report are as follows:

After decades of globalization, an era of deglobalization (regionalization) is now firmly taking root, driven by geopolitics and the rise of low-cost, high-tech vehicles from China.

China's ambition to enter emerging markets presents a challenge to both traditional automakers and suppliers, with Chinese brands projected to capture a 16% share in Europe.

The "new ICE era" in the United States presents a dual challenge: a short-term opportunity for cash flow, but also an existential threat where companies that fail to capitalize on this opportunity risk losing long-term competitiveness.

The ideal "USMCA 2.0" should focus on strengthening competitiveness against China, rather than Mexico and Canada, while minimizing cost increases for U.S. vehicles. Through pre-competitive technology and equipment cooperation, tariff revenues should be invested in strengthening industrial resilience and price competitiveness.

Sales of Chinese brand vehicles in Europe (including Russia) are expected to increase by 25% this year to 2.3 million units, with market share reaching 16% by 2030 and 17% by 2031. The global market share for plug-in EV vehicles is projected to reach 36% by 2030.

The hidden compliance costs associated with adapting to "USMCA 2.0" could amount to as much as $2,000 per vehicle annually.

New vehicle sales in the United States are expected to fall by 2.5% to 15.8 million units in 2026. New vehicle purchases will be limited to a select group of high-income earners, but sales are expected to recover to 16.8 million units by 2030.

Sales in China are expected to drop by 10% this year to 24.6 million units, but are projected to recover to 26.2 million units by 2030.

AI-Defined Vehicles (AI-DVs) are undoubtedly the next frontier in automotive technology. However, the demand for key memory components required for AI-DVs is expected to see the share for data centers reach approximately double the current level, around 50%, by 2028. This will likely lead to a surge in semiconductor costs as automakers increase their utilization.

Facing stagnant sales in European and North American markets, automakers are expected to pursue diversification into adjacent fields such as defense, humanoid robotics, and energy storage. However, many companies lack the necessary manufacturing scale and infrastructure for this.

Sales outlooks vary significantly by market. While China is expected to see gradual recovery and growth in the coming years, stagnation is anticipated to continue in the United States and Europe.

Sustained pressure on sales is expected to further accelerate the decline in sales for foreign manufacturers in the Chinese market. Consequently, original equipment manufacturers (OEMs) and suppliers outside of China will be compelled to focus more on strengthening competitiveness in their home markets, as they lose stable revenue streams from China.

The U.S. government has been implementing measures such as promoting USMCA 2.0, strengthening tariffs, and regulating Chinese hardware and software. This requires automakers to simultaneously manage two product lines: "global specifications" that heavily utilize Chinese technology and components, and specifications compliant with USMCA.

In the Japanese market, the market share of EVs is projected to expand. The share of EVs is expected to reach 11% in 2030 and 30% in 2035, compared to 4% this year. Factors contributing to this include increased competition and a wider range of consumer choices due to the growing presence of overseas OEMs, including Chinese manufacturers like BYD, which is also gradually driving down BEV prices.

Mark Wakefield, Global Leader of the Automotive Practice, stated:

"The arrival of a new era of regionalization in the automotive industry places nearly every company in the industry at a critical crossroads. Amidst unprecedented change, careful consideration is required to determine which markets, technologies, and partnerships to invest in. The renegotiation of USMCA could lead to increased costs for vehicles destined for the U.S. This could result in an expansion of U.S. share within a shrinking pie, with overall volume decreasing. On the other hand, by leveraging the strengths and existing production capacity of Mexico and Canada to build supply chains, and by establishing pre-competitive cooperation within the U.S. in key areas such as battery supply chains, semiconductors, autonomous driving, and electrical architectures, there is an opportunity to build a resilient and competitive industry centered in the U.S. – a 'North American Fortress.'"

This report analyzes the global automotive industry, where markets are heading in opposing directions. While China is strongly committed to electrification, the United States appears to be moving towards a "new ICE era" where sales of internal combustion engine (ICE) and hybrid vehicles will continue to be dominant. However, this era is also expected to reach a turning point, with plug-in electric vehicles projected to account for 36% of global sales by 2030.

Dan Hearsch, Global Co-Leader of the Automotive and Industrial Practice, stated:

"The customer base for ICE and hybrid vehicles in the U.S. presents a significant profit opportunity in the short term. However, it could pose a major risk in the long term. By settling within protectionist walls, it could inadvertently open the door for Chinese companies to gain market share in the U.S. through joint ventures, licensing, and other indirect means. This report forecasts that Chinese automakers' exports will reach approximately 10 million units in 2026, up from 7.1 million units in 2025. However, exports are merely the first step in Chinese companies' overseas expansion; the ultimate goal is local assembly production. To bridge these two stages, technology licensing, local contract manufacturing, and joint ventures are expected to be utilized in some protected markets."

This report also focuses on the long-term challenges that automakers must address immediately. It predicts a shift beyond SDVs to the next frontier: AI-DVs.

In AI-DVs, vehicles will possess the ability to learn and self-repair, rather than relying on over-the-air (OTA) updates. This approach offers value in both streamlining product development and enhancing vehicle performance, the report points out.

Andrew Bergbaum, Global Co-Leader of the Automotive and Industrial Practice, stated:

"The competition to develop smarter vehicles presents an exciting opportunity for proactive players in the industry. However, securing the foundation to support that future will be a significant challenge. Semiconductors are the most fiercely contested vehicle components globally, and automakers are placed in a situation where they must secure sufficient chip supply at reasonable costs while competing with data centers and countless hardware manufacturers."

With the demand for AI data centers serving as a significant headwind against this transition cost, the report predicts that data centers will account for 50% of available microchip supply within the next three years.

To address supply challenges, the report recommends that automakers forge partnerships, fundamentally redesign product processes, and collaborate with key technology companies through joint ventures and capital investments.

Another strategy expected to gain traction from this report is diversification into adjacent fields that offer new growth pathways for automakers without replacing existing supply capabilities. Target areas include battery energy storage solutions, automation, and defense. However, the report notes that many automotive-related companies are still not adequately prepared to capitalize on these opportunities.

Xing Zhou, Co-Head of Automotive and Industrial Practice DACH (Germany, Austria, Switzerland), stated:

"The automotive industry has long been interested in diversification, including entering sectors such as the aftermarket, commercial vehicles, aerospace, and powersports. Future strategies will involve automakers seeking growth by balancing market attractiveness with their own suitability. When product knowledge and process expertise gained in the automotive industry can be applied to other fields, the biggest constraints become obtaining certification and customer access."

Tomoyuki Suzuki, Japan Leader of the Automotive and Manufacturing Practice, stated:

"This year's outlook analyzes the global automotive industry, where markets are heading in opposing directions. While China is strongly committed to electrification, the United States appears to be moving towards a "new ICE era" where sales of ICE and hybrid vehicles will continue to be dominant. However, this era is also expected to reach a turning point, with plug-in electric vehicles projected to account for 36% of global sales by 2030."

About AlixPartners

Founded in 1981, AlixPartners is a results-driven global consulting firm headquartered in New York. It specializes in corporate turnarounds and assisting with urgent and complex problem-solving. Its clients span a wide range, including private companies, law firms, investment banks, and private equity firms. The firm has offices in approximately 20 cities worldwide. The Japan office was established in 2005. The Japanese website is https://www.alixpartners.com/jp/