100 million cars, but which automakers are in the fast lane?

By James Yardley on 23 September 2026 in Equities, Specialist investing

Our demand for vehicles seems insatiable. Almost 100 million are sold each year, with leading manufacturers making billions of pounds. But investing in this sector isn’t straightforward. Regulatory pressures, rising costs, and technological developments can make share prices volatile.

Our analysis of the 10 biggest automakers reveals some stocks have risen more than 20% since the start of 2026, while others have plummeted 35%. Here we look at the pros and cons of this $2.6 trillion industry, examine the outlook for car sales, and highlight investment funds backing the sector.

Sector overview

Global sales climbed from 95.3 million in 2024 to 99.8 million units last year (+4.7%), according to the International Organisation of Motor Vehicle Manufacturers (OICA). China accounted for more than a third of sales (34.4 million), followed by 16.7 million in the United States and India’s 5.5 million. The OICA emphasised that the sector was “increasingly fragmented” by region, technological pathways and policy environment. Growth is concentrating in Asia, it pointed out, while Europe stagnates and the Americas face widening tensions between demand, production and trade conditions*.

The biggest sellers

German rival Volkswagen Group came in second. It sold just under nine million vehicles over the year, down 0.5%**.

Largest by market cap

Tesla, the US producer of electric cars, has the largest market capitalisation of £1.1 trillion, comfortably ahead of Toyota’s £170.45 billion***. Its stock price has risen 45% over the past five years, although it’s down 14% year-to-date**** due to surging capital expenditure and valuation concerns.

Chinese manufacturer BYD, which has been involved in electric vehicles for 23 years, takes third place with a £88.12 billion market cap***. Legendary investor Warren Buffett’s Berkshire Hathaway had invested in BYD for 17 years. Its holding grew 20-fold before completely exiting the position last year^.

Outlook

So, what’s likely to happen to car sales – and manufacturer profitability? Well, the outlook depends largely on the region and vehicle type.

More generally, S&P expects Chinese vehicle sales to slip 7% due to headwinds such as reduced tax incentives that are increasing vehicle ownership costs and slowing demand^^^. However, there’s more positive news in India. It achieved record passenger-vehicle sales in August 2026, according to the Society of Indian Automobile Manufacturers (SIAM). Rajesh Menon, SIAM’s director general, highlighted strong consumer confidence, resilient rural markets and improving financial conditions^^^^, saying: “India’s automobile industry is passing through a robust growth phase.”

How to add exposure to your portfolio

A variety of investment funds hold stocks involved in global vehicle manufacturing, so it depends on what exposure you’re seeking. Here are some worth considering across the sector:

Toyota and Honda

For example, M&G Japan invests in Toyota and Honda*^. Its managers, Carl Vine and Dave Perrett, consider Japanese firms across the market-cap spectrum. They focus on getting under the skin of businesses and typically hold fewer than 60 names, mainly large and mid-cap companies. We like Carl’s passion for the Japanese market and believe he has a great understanding of its different businesses and various drivers.

Tesla

If you want exposure to Tesla, consider Capital Group New Perspective, as it’s currently the seventh-largest stock exposure in the portfolio**^. This is the flagship global equities strategy of Capital Group and boasts a 50-plus-year track record of investing in some of the world’s largest multinational operations. It has multiple managers, alongside a bench of analysts, which means the fund avoids key-person risk that can exist within other fund groups.

BYD

This Chinese manufacturer is a holding in the Templeton Emerging Markets Investment Trust, managed by Chetan Sehgal and Andrew Ness. The trust focuses on high-quality businesses with strong balance sheets, good cash flow generation and attractive valuations. The management team taps into the vast analyst resource when selecting the 60-80 stocks that make up its portfolio. We like how it’s been successful in different market environments.

Ferrari

Few manufacturers are as instantly recognisable – or desirable – as Ferrari. The Italian company has produced an eye-watering number of supercars over the years. The stock, which has risen 90% over the past five years and over 10% since the start of 2026****, is held by the Scottish Mortgage Investment Trust***^. The trust, which dates back to 1909, holds between 50 and 100 companies worldwide, all of which share strong growth prospects. Its managers have a patient buy-and-hold approach.

Kia

Shares in the South Korean manufacturer have risen roughly 16% over the past 12 months and around 44% over five years****. It recently achieved record quarterly revenue of KRW 33.04 trillion, up 12.6% year-on-year, thanks to robust sales of electric models*^^. The stock is held by the Schroder Asian Income fund*^. Its manager, Richard Sennitt, favours companies offering attractive yields and growing dividend payments.

Mahindra & Mahindra

Shares in the company have enjoyed a spectacular 290% rise over the past five years**** due to market share gains, impressive sales and consistent earnings numbers. It’s the fourth largest holding**^ in the Goldman Sachs India Equity Portfolio, whose objective is to capture the growth potential of the Indian economy. The management team believes company meetings are crucial, and its ability to meet them on the ground in India sets it apart from many rivals.

*Source: OICA, 23 April 2026
**Source: Reuters, 29 January 2026
***Source: Companiesmarketcap.com, at 22 September 2026
****Source: Google finance, 22 September 2026
^Source: Yahoo finance, 22 September 2025
^^Source: IEA, 20 May 2026
^^^Source: S&P Mobility Global, 15 June 2026
^^^^Source: SIAM, Auto Industry Performance of August 2026, 15 September 2026
*^Source: FE Analytics, full portfolio listings, May 2026
**^Source: fund factsheet, 31 August 2026
***^Source: Scottish Mortgage, top 30 holdings, 31 August 2026
*^^Source: KIA, 24 July 2026