BoA further notes that Chinese manufacturers are expanding rapidly in Europe, capturing approximately 8% market share, and are localizing operations by utilizing idle production capacity to ramp up pricing pressure.

In response to these risks, analysts have adjusted their ratings on several European automakers. They have downgraded Stellantis to Underperform, slashing their price target from 5.5 to 4.5 euros. Renault has been moved to Neutral, with the target price lowered to 33 euros from 36 euros. Finally, while the Buy rating on Volkswagen is maintained, the target has been reduced to 99 euros for preferred shares and 105 euros for ordinary shares.

Regarding Renault, which is among the steepest decliners on the CAC 40 (-2.90% at 27.7 euros), Bank of America considers the stock cheap but lacking catalysts. In its analysis, the U.S. bank points out that net cash and the Nissan stake provide a floor against excessive downside, but the BEV (Battery Electric Vehicle) mix and rising raw material costs are diluting margins. Furthermore, high exposure to Europe and the B-segment makes Renault vulnerable to Chinese pricing pressure. Lastly, BoA sees potential for downward revisions to 2026 forecasts.

For Stellantis (-1.06% at 6.453 euros), analysts argue that too much recovery optimism is already priced in. Moreover, the U.S. rebound relies heavily on the V8 engine mix, while Europe remains structurally weak. Simultaneously, profit centers in Latin America and the Middle East & Africa are exposed to Chinese localization. Bank of America expects the operating margin for FY27/28 to land between 2.9% and 3.2%, significantly below consensus.

Finally, concerning Volkswagen, BoA believes the primary levers are internal: restructuring of labor, plants, R&D, and overhead costs.

In conclusion, analysts note that China's automotive overcapacity is flooding Europe, accelerated by fuel price pressures. Chinese brands are offering EVs approximately 5% cheaper for comparable range, and plug-in hybrids 30% cheaper with 10% more electric range. The UK serves as a bridgehead, but Italy, Spain, and Germany are also seeing Chinese market shares rise.