Investing.com -- Barclays (LON:BARC) has adjusted its ratings in the European truck sector, downgrading Volvo (ST:VOLVb), Daimler (OTC:MBGAF) Truck (ETR:DTGGe), and Traton (ETR:8TRA) amid growing tariffs, macro, and regulatory risks.
“It's time to take a breather in EU Trucks,” analysts led by Erwann Dagorne wrote.
The sector has staged a strong year-to-date performance as the European market demonstrates signs of stabilization. However, analysts argue that optimism may be premature, especially as North American headwinds remain underappreciated.
“We believe increasing tariffs/macro and regulatory risks in North America are adding another layer of uncertainties to the Class 8 truck market that is still largely ignored by the Street in our view,” analysts said.
In addition, the expected boost from the EPA27-related pre-buy cycle beginning in the second half of 2025—previously seen as a factor delaying normalization in the Class 8 on-highway market—now appears uncertain too due to the EPA’s recent move to reconsider emissions standards for heavy-duty trucks.
Volvo stock, which Barclays cut to Underweight from Equal Weight, drew particular scrutiny after two consecutive quarterly margin misses and what the bank described as a “rather optimistic 2025 market outlook.”
Despite positive sentiment on its European exposure and new U.S. product launches, the analysts said the company’s quality profile “makes investors too complacent with the equity story.”
They flagged FX headwinds from a stronger Swedish krona and noted that Street estimates still don’t fully reflect the company’s earnings risks.
“Moreover, it still faces a relative valuation disadvantage to peers, notably against its German peers, Daimler Truck and Traton Group,” analysts added.
Traton Group saw strong recent outperformance, but Barclays sees limited catalysts ahead, leading the bank’s downgrade to Equal Weight from Overweight.
“Traton is – like others – not immune to the increasing uncertainties in North America,” analysts noted, adding that ramp-up costs in China and limited strategic moves by majority owner Volkswagen (ETR:VOWG_p) could limit further upside.
For Daimler Truck, the downgrade stems from rising pressure in its core North American market and delays in detailing its planned €1 billion European cost-saving program.
Barclays sees little near-term excitement for investors, warning that “2025 Street expectations are also too high, adding risks of disappointments in the coming weeks/months.”
