6 Car Giants Collapsing in 2026 — Number One Invented the Car

Summary

The video argues that six established automakers are under pressure from weakening demand, exposure to China, tariffs, and the costs of adjusting their product and manufacturing strategies. The headline “collapsing” is qualified: Toyota is described as the strongest company on the list, while BMW remains profitable and Mercedes-Benz Group still earns money overall.

Companies and Business Pressures

Toyota

Global sales are rising, but operating income reportedly fell by about 20%. US tariffs cost nearly $9 billion, which the video says was enough to erase the company’s annual North American profit.

Toyota’s hybrid strategy appears to have aligned with customer demand. The video cites Cap HPI data showing used hybrid values rising in September, while values for several other powertrain types fell.

Toyota’s UK operations include Corolla production at Burnaston and engine production at Deeside. The presenter warns that future model-allocation decisions could affect those plants.

Assessment: Toyota is not portrayed as being at immediate risk. Instead, its margin pressure is presented as evidence that even a highly scaled, well-managed automaker is exposed to trade-policy shocks.

Polestar

The video says US rules targeting Chinese vehicle software and hardware will prevent Polestar from selling new cars there from the next model year. Its sister company Volvo received permission to continue, while Polestar’s similar request was rejected.

94% of Polestar’s first-quarter sales reportedly came from outside the US, but the presenter argues that exclusion still carries reputational and financial costs. Shares fell by more than 13% when the US exit was announced.

Second-quarter sales fell 4%. Leaving the US added $211 million to losses in the first six months. Polestar also raised $700 million in capital and converted $640 million of debt into equity.

The Polestar 4 is being manufactured in South Korea rather than China, presented as a move to diversify production and clarify the car’s origin.

Assessment: Polestar’s financing needs, market access, and reliance on its parent group make its long-term viability important to monitor.

Audi

First-half revenue fell by more than 10%, or €3.4 billion. Audi’s share of Chinese joint-venture profits dropped from €279 million to €73 million, while US sales fell nearly 30% in the first quarter.

Profit after tax declined from €1.35 billion to €1.12 billion. Audi cut its annual outlook: the video says revenue could fall to €58 billion, versus an earlier expectation of at least €63 billion, and its profit margin could fall to as low as 5%.

Audi closed its Brussels plant, which built an electric SUV, citing insufficient demand. Its CFO said existing cost cuts were not enough and that Audi needed to work with Volkswagen Group to realign its business model.

The video notes a contrast within the group: Lamborghini recorded record revenue while Audi was downsizing. Audi’s operating profit remained stable in the first half, mainly because of cost reductions.

Assessment: The central issue is a weak product-and-market bet in China and electric vehicles, combined with a need for group-level restructuring.

Volvo

Third-quarter global sales were 141,609, down nearly 11%. Volvo said it would miss its annual sales and cash-flow projections, citing worsening conditions in China and a slower-than-expected US recovery.

The video reports that Volvo’s shares fell as much as 4% to a record low. Full results were due on October 23.

A new CEO, then the head of Škoda, was expected to take over. Volvo also moved production of its smallest European-market electric car from China to Belgium, partly to address tariffs and buyer concerns about production origin.

Assessment: Management faces the immediate challenge of restoring demand and cash flow. The presenter warns that price cuts to clear inventory could support sales but weaken resale values.

BMW

BMW issued its third profit warning in just over three years. The video says roughly one-third of its sales go to China, where demand has weakened.

Its latest reported automotive margin was 2.3%. The company’s new target is 3–5% by 2028, with a longer-term aim of 8–10% in the early 2030s.

A workforce reduction program is expected to affect around 8,000 jobs in Germany, alongside management cuts. The recovery plan also depends on AI and two new model launches.

BMW has delayed plans to build electric Minis in Oxford; the electric Mini Cooper mentioned in the video is currently made in China.

Assessment: BMW remains profitable, but its targets imply a prolonged margin-recovery effort. Cost reduction, product launches, and China exposure are key execution risks.

Mercedes-Benz

Mercedes’ reported profit from car sales fell 94% in the second quarter, from €783 million to €49 million, largely due to a major write-down of China investments. China sales fell about 30%.

The company warned employees that German production was not cost-competitive internationally and that two German plants could close.

The video says Mercedes has faced criticism from some loyal AMG customers after replacing the C63’s V8 with a four-cylinder hybrid.

It also highlights a potential US regulatory issue: two Chinese shareholders together own close to one-fifth of Mercedes, and a proposed US bill could restrict automakers with more than 15% Chinese ownership. The bill’s sponsor reportedly said lawmakers would seek to protect Mercedes.

Mercedes-Benz Group as a whole remains profitable, supported by its vans and financial-services business.

Assessment: The automotive division’s sharp profit decline, factory competitiveness, China dependence, and product decisions are presented as strategic risks.

Business Frameworks, Patterns, and Recommendations

• Manage market and supply-chain concentration: The presenter identifies China exposure as a common vulnerability for five of the six companies; Toyota’s main pressure is instead attributed to US tariffs. The broader lesson is to avoid dependence on a single major market or production base.
• Align product strategy with actual demand: Toyota’s continued investment in hybrids is contrasted with competitors’ heavier bets on fully electric vehicles. The video’s implication is to maintain a portfolio that reflects customer uptake rather than relying on a single technology forecast.
• Track operating health, not just sales: The examples distinguish growing or substantial sales from healthy economics. Useful indicators include operating margin, cash flow, regional sales, profit warnings, plant utilization, restructuring costs, and required external financing.
• Watch the consequences of discounting: The presenter outlines a sequence: automakers discount new vehicles to maintain sales and factory activity; discounts can reduce used-car values; sustained weakness may then lead to model cancellations, dealership closures, and slower parts availability.
• Evaluate restructuring against execution: Plant closures, job cuts, production transfers, new-model launches, and group-level realignment are described as responses. Their success depends on restoring demand and margins, not just reducing costs.
• For buyers, compare total ownership risk: The video recommends comparing dealer offers, checking local dealership and service coverage, and considering resale value alongside the purchase discount. For buyers using finance, it advises checking the settlement amount and how a falling vehicle value could affect the final payment. These are the presenter’s suggestions, not individualized financial advice.

Metrics and Timelines Highlighted

• Toyota: Operating income down about one-fifth; US tariffs of nearly $9 billion.
• Polestar: Q2 sales down 4%; $211 million in additional losses associated with exiting the US over six months; $700 million raised and $640 million of debt converted to equity.
• Audi: First-half revenue down €3.4 billion; Chinese joint-venture profit share down from €279 million to €73 million; revenue outlook lowered to €58 billion from at least €63 billion.
• Volvo: Q3 sales of 141,609, down nearly 11%; annual sales and cash-flow targets withdrawn or missed; results scheduled for October 23.
• BMW: Automotive margin at 2.3%; target of 3–5% by 2028, then 8–10% in the early 2030s; around 8,000 German jobs expected to be affected.
• Mercedes-Benz: Q2 car profit down 94%, from €783 million to €49 million; China sales down about 30%; two German plants potentially at risk.

Presenter and Sources

The presenter is unnamed in the subtitles; the video is from The Sleeper List. Sources and references mentioned include company reports and statements, Cap HPI valuation data, an unnamed analyst commenting on BMW, and an anecdotal viewer comment about an older Volvo.