European truck manufacturers face divergent paths with Morgan Stanley highlighting clear winners in both short and long-term horizons in its latest sector analysis.
The investment bank’s research points to strong fundamentals for select players despite regional demand variations, with North America showing weakness while European markets demonstrate resilience. Shareholder returns, production strategies, and potential tariff impacts are shaping the competitive landscape.
According to Morgan Stanley’s analysis, these are the top European truck manufacturers to watch:
Daimler Truck - Morgan Stanley maintains an Overweight rating with a €46 price target (23% upside), citing it as the preferred long-term truck investment. Despite reducing FY25 estimates due to weaker North American demand, analysts remain confident in Daimler’s positioning for a cyclical rebound in FY26.
The company’s strengths include North American market exposure, self-help initiatives targeting €1 billion in cost savings by FY30, German infrastructure spending benefits, and an attractive shareholder return strategy featuring buybacks and dividends exceeding an 8% total cash yield.
In recent developments, Daimler Truck projected annual organic revenue growth of 3% to 5% in its industrial business through 2030. The company is also expanding its military vehicle partnership with General Dynamics and seeking an investment partner for its autonomous-driving unit.
Volvo - Morgan Stanley maintains an Overweight rating with a SEK305 price target (11% upside). The bank views Volvo as the more compelling short-term investment given its approximately 40% European exposure where demand is already improving. Volvo stands out for its earnings resilience during market downturns and could benefit if the Section 232 investigation results in tariffs for Mexico-based producers. The company’s consistent evaluation of demand, flexible workforce, and quick decision-making keep it ahead of competitors during market fluctuations.
Volvo has agreed to sell its 70% stake in Chinese construction equipment manufacturer Shandong Lingong Construction Machinery Co for approximately $833 million. The company also announced an upcoming change in its executive board, with a new Group Chief Technology Officer appointed.
Traton - Morgan Stanley maintains an Equal-weight rating with a €32 price target (5% upside). With approximately 50% European exposure, Traton is well-positioned to benefit from improving European truck demand and potential German infrastructure spending.
However, weak North American demand and investment costs for its new €2 billion China factory present near-term headwinds. The bank projects a 6.6% group adjusted EBIT margin for FY25, with ongoing efforts to increase the company’s limited free float potentially reducing its valuation discount to peers.
Traton reported a 1% increase in second-quarter deliveries compared to the prior year, with its international motors division achieving a 10% rise in sales.
Iveco - Morgan Stanley has reduced FY25/FY26 volume expectations for Iveco, reflecting continued demand weakness across light, medium, and heavy-duty truck segments.
This is partially offset by positive pricing from Iveco’s new MY24 product lineup and self-help actions, resulting in a 5%/2% reduction in revenue expectations for FY25/26 and a 4%/10% decline in group EBIT estimates.
