UBS has cut its rating on Inchcape, the FTSE 250 global automotive distributor, from 'buy' to 'neutral' and slashed its price target to 750p from 990p.
In doing so, it cited weakening vehicle volumes and an accelerating shift to electric vehicles in markets where the company is underexposed.
Analyst Abi Bell said UBS's proprietary vehicle volume tracker, covering around 80% of Inchcape's markets, points to a significant deterioration in trading momentum.
Distributed volumes are estimated to have fallen around 3.6% year on year in July and August 2026, after growth of 14% in the second quarter.
The sharpest pressure is coming from the Asia-Pacific region, which represents around 28% of group sales, where UBS forecasts profits falling around 47% year on year in the second half of 2026, extending a 53% decline seen in the first half.
The broker identified Australia as a particular pressure point, estimating Inchcape's distributed volumes there have fallen around 34% year on year in the third quarter'
This reflected a rapid acceleration in electric vehicle demand that has left the group's incumbent portfolio, weighted towards Subaru and other internal combustion engine brands, poorly positioned.
In Hong Kong and Singapore, faster-growing Chinese brands have eaten into market share previously held by Inchcape's Toyota and Lexus franchises.
UBS cut its adjusted earnings per share forecasts by 2-7% across 2026-28, reflecting the weaker volume outlook and a more gradual APAC recovery than previously assumed.
The broker acknowledged the stock looks cheap, trading at less than 8x forward earnings with a forecast cash return of around 9% from dividends and buybacks.
But it said a meaningful re-rating is unlikely without clear evidence that APAC volumes and margins are recovering.
Inchcape reports a third-quarter trading update on 22 October.
