If you are looking for exposure to the automotive sector, then it could pay to listen to what Macquarie Group Ltd (ASX: MQG) is saying.
That's because the broker has just named its top picks in the sector.
Which are Macquarie's top ASX All Ords auto picks?
Firstly, let's start with auto dealers. The good news for them is that Macquarie believes that profit margins are about to hit a cyclical bottom. Especially given interest rate cuts and reduced discounting. It said:
We believe dealer UPBT margins are likely approaching a cyclical bottom. GPM pressure should start abating as discounting reduces given broadly right-sized inventory. Additional rate cuts will provide relief to bailment costs and are a tailwind for UPBT margins. We believe the potential benefit of rate cuts is not fully factored into consensus earnings. Every 25bp rate cut provides a ~$6.3m/$2m annualised benefit for APE/ASG's interest costs.
Because of this, Macquarie has outperform ratings on both Eagers Automotive Ltd (ASX: APE) and Autosports Group Ltd (ASX: ASG) shares with price targets of $20.35 and $2.00, respectively. It adds:
We have an OP on APE and ASG. APE is our preference given: 1) scale; 2) brand diversity; 3) BYD opportunity; 4) LT margin upside; and 5) potential offshore expansion. APE's CY25 guidance is for ~30k BYD volumes and 15.2k have been delivered CY25YTD, supported by 7.4k Shark deliveries.
What else?
Macquarie highlights that 4×4 Accessories were mixed in May. It said:
: May'25 volumes were mixed across key models with strength in Prado & Landcruiser, while the Hilux, Ranger and Navara were all down double digits. Our 4×4/ARB index was up +4.8% in May'25 and down -14.6% FY25YTD. Avg vehicles per month in 2H25TD is +2% vs 1H25 before the seasonally strong month of June, so 2H25 volumes should see sequential improvement on 1H25. Our APG/AOV index declined -8.5% in May'25 and is down -4.8% FYTD. Volumes in APG's top 20 and also key 4×4 models, where it over-indexes in revenue per vehicle, remain under pressure.
Nevertheless, it remains positive on ASX All Ords shares ARB Corporation Ltd (ASX: ARB) and Amotiv Ltd (ASX: AOV). It has price targets of $45.40 and $10.90, respectively, on them. It adds:
We have an OP on AOV and ARB. AOV's val is attractive (~10x FY25e PE) and we remain positive on ARB's offshore growth opportunities (~24x FY25e PE).
In addition, Macquarie has an outperform rating and $5.85 price target on Bapcor Ltd (ASX: BAP) shares.
