Prepared remarks
Hello, and welcome to the Stellantis Q1 2026 Financial Results Call. Operator Instructions: I now give the floor to Mr. Charlie Christman, Head of Investor Relations, to begin today's conference. Sir, the floor is yours.
Thank you. Hello, everyone, and thank you for joining us today as we review Stellantis Q1 2026 results. Earlier today, the presentation material for this call, along with the related press release, were posted under the Investors section of the Stellantis Group website. Today, our call is hosted by Antonio Filosa, Chief Executive Officer; and Joao Laranjo, Chief Financial Officer. After their prepared remarks, Antonio and Joao will be available to answer questions from the analysts. Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on Page 2 of today's presentation. As customary, the call will be governed by that language. I'd also like to point out that with our switch to quarterly reporting, we have made some changes to streamline our earnings presentation. Now I will hand the call over to Antonio Filosa, Chief Executive Officer of Stellantis.
Thank you. Thank you, Charlie. And thank you all very much for joining us today as we discuss our first quarter results for the year. First, let me say, following the decisive reset action taken in 2025, our focus is now on disciplined execution, and we are seeing early signs of progress, consistent with our expectations. With that, I'm happy to share that in Q1 2026 we are now seeing the results of that successful execution as we delivered a return to profitability. We are now back on a path to sustainable growth with key priorities being growing our business, improving our industrial execution and enhancing our profitability. This is evident by the market share gains in several regions and the 12% year-over-year growth in shipments. We are very excited about our 10 all-new products and 6 refreshed products in 2026. We remain realistic about the path ahead. The environment remains challenging across all regions, but our strategy is unchanged: put the customer at the center of everything we do, empower regions to execute faster and apply rigorous capital and cost discipline.
Now let me touch on some first quarter highlights from a regional perspective. In North America, despite a challenging U.S. market where the industry was down 6%, our sales increased 4%, driven by Ram and by Jeep. We gained approximately 80 basis points of market share. Ram specifically had a very strong Q1, posting a 20% U.S. sales increase year-over-year, its best Q1 since 2023. This success is what has made Ram the fastest-growing brand in the North American industry. We also gained market share in Canada and in Mexico, reflecting consistent progress across all countries. As a result, Stellantis is the fastest-growing automaker in North America. Overall, we remain encouraged by our North America order book that remains strong, growing more than 20% year-over-year. On the product side, we continue to benefit from the late 2025 launches ramping up for the new Jeep Cherokee and the new Dodge Charger SIXPACK.
And looking ahead for 2026, I'm very excited about the upcoming launches of the new Ram SRT TRX, the new Jeep Recon BEV and our first range-extended Jeep Grand Wagoneer REEV coming this year. Turning to Enlarged Europe. Sales were up 5%, or 8% up including Leapmotor, as compared to Q1 2025 to over 730,000 vehicles. Our EU30 market share reached 17.5%. This is the highest share in a quarter since Q1 2024. Adding the sales from Leapmotor, our combined market share in Europe increased to 18.1%. We continued our leadership position in hybrids and in key markets such as France and Italy, with strong performance also in Germany and in Spain. Stellantis Pro One closed Q1 as the European leader in light commercial vehicles with a 28.7% market share. On the European product wave, I would like to add that we continue to benefit from the recent C-SUV launches as they further ramp up this year, contributing to EU30 sales positively with 12,000 units year-over-year.
The smart car lineup has seen Q1 sales up almost 60,000 units year-over-year. And overall, the European order book is up 9%. Turning to South America. We maintained our dominant leadership position with highlights including the strong results in the region's two major markets, 29% market share in both Brazil and Argentina. We are also #2 in Chile, another critical market for the region. Let me touch on the important Ram Dakota launch. Ram Dakota launched in late 2025 in Argentina and has been ramping up production. We also launched Ram Dakota in Brazil during this quarter. Ram Dakota addresses the midsized truck segment, home of the region's largest profit pool. Moving to Middle East and Africa. Market share for the region increased to 11.5%, up 50 basis points year-over-year, driven by 18% year-over-year sales growth in Algeria and #1 positions in both Turkey and Algeria. Geopolitical tensions remain.
However, in Q1, we improved commercial performance, normalized our inventory levels and remain focused on localization, increasing our production levels both in Algeria and in Turkey. Lastly, in APAC, shipments saw growth of 15% year-over-year despite a weaker industry environment. All in all, momentum is there, momentum has started and momentum is strong. I could not be more proud of our Stellantis teams as they remain focused on improving product and commercial execution and stabilizing volume and mix while reinforcing cost management and operational discipline. Execution will define 2026. Our priorities are clear, and we are confident that the actions we are taking are exactly the right ones. Before I hand you to Joao to walk you through the numbers, just a quick reminder of our upcoming Investor Day event on May 21, where we will outline the next phase of our strategy with clear priorities, clear targets and a focused road map for execution. Joao?
Thank you, Antonio. Good afternoon, and good morning, everyone. Q1 was a quarter of execution and a return to profitability. Let me start with the key financial figures. Consolidated shipments were 1.4 million units, up 12% year-over-year, with all regions contributing to the growth. Net revenues were EUR 38.1 billion, up EUR 2.3 billion or 6% compared to Q1 of last year. This improvement was driven by two main factors. Volume mix contributed approximately EUR 4.2 billion, supported by volume growth across all regions with North America the primary contributor. Foreign exchange translation had a negative impact of approximately EUR 2.4 billion, mainly driven by North America and Middle East and Africa. Adjusted operating income returned to positive at EUR 1 billion for the quarter, improving by EUR 633 million compared to Q1 of last year. AOI margin was 2.5%, representing a 160-basis-point improvement year-over-year.
The key drivers of the AOI improvement were: volume mix had a positive impact of EUR 739 million, reflecting higher shipments across all regions and favorable mix with the largest contribution coming from North America; net pricing contributed EUR 99 million, supported by favorable net pricing in North America and Middle East and Africa, partially offset by negative net pricing in Enlarged Europe; industrial costs improved by EUR 412 million, driven by better product, manufacturing and logistic cost performance, supported by a more stable production schedule. The impact of tariffs was broadly neutral year-over-year as the recognition of approximately EUR 400 million of IEEPA tariff adjustment offset Q1 2026 tariff costs. SG&A costs increased by EUR 153 million, largely reflecting higher marketing expenses to support volume growth. Lastly, foreign exchange and other had a negative impact of EUR 383 million, mainly driven by the Turkish lira devaluation.
Moving to industrial free cash flow and balance sheet. Industrial free cash flow was negative EUR 1.9 billion in Q1, representing a EUR 1.1 billion improvement year-over-year. This improvement reflects stronger operating performance, disciplined capital allocation and normal seasonal working capital dynamics. Importantly, it was achieved despite approximately EUR 700 million of cash outflows related to H2 2025 charges. I also would like to highlight that in March 2026, we issued 3 tranches of hybrid perpetual notes for a total of EUR 5 billion. This further strengthened our capital structure and supported industrial available liquidity of EUR 44 billion at quarter end, representing 28% of net revenues and within our target liquidity range of 25% to 30%. Now looking at inventory. Total inventory increased 11% year-over-year to 1.3 million units. Our inventory levels remain aligned with commercial momentum, support the launch pipeline while maintaining discipline.
Turning to our regional performance. Please note that following the change in our reporting segments, comparatives have been restated accordingly. Maserati is no longer reported as a separate segment and is now managed consistently with the other brands within the regions. North America delivered a positive AOI of EUR 263 million with an AOI margin of 1.6%. This represents a year-over-year improvement of EUR 805 million, primarily driven by higher Ram shipments, combined with positive net price and improvements in industrial execution. In Enlarged Europe, AOI was effectively breakeven. While the operating environment remains challenging with continued margin pressure, we're encouraged by the region's market share improvement and return to breakeven performance. In South America and Middle East and Africa, both regions continue to provide strong earnings contributions to the group. South America delivered AOI of EUR 393 million, while Middle East and Africa delivered AOI of EUR 282 million.
Looking ahead to the remainder of the year, we are confirming our 2026 financial guidance as outlined on February 6. We expect an improvement in net revenues, margins and industrial free cash flow supported by strong liquidity and a more resilient operating model. We also expect to continue managing volatility related to geopolitical, trading and inflationary pressures. Thank you. We'll now ask the operator to open the line for questions.
Questions and answers
Now the first question comes from the line of Jose Asumendi from JPMorgan.
Two questions, please. The first one, can you talk about the margin momentum in North America? Do you think Q2 earnings will be up in the U.S. versus Q1? And which vehicles and cost pressures do you think will drive into Q2 and the second half of the year? And then second question, please, when it comes to free cash flow expectations, can you elaborate a bit more on the movements we're seeing on working capital? Do you expect that working capital to unwind towards the second half of the year? And how should we think about restructuring cash outflow? Ultimately, I'm trying to understand if you're already seeing free cash flow towards breakeven or cash generation towards the second half of the year.
Okay. I'll address first the free cash flow question. So as you can see on the results, free cash flow has improved versus last year across all items, excluding provisions where we have the EUR 700 million of supplier claims. Working capital is seasonal, as you mentioned, both in Q1 and Q3. The improvements that we saw in Q1 are consistent with the guidance that we have. And then looking forward, Jose, if you look at 2025, we had a negative industrial free cash flow of minus EUR 4.5 billion for the full year, of which minus EUR 3 billion in Q1. We did better in Q1 despite the EUR 700 million of supplier claims, and we expect to continue to do better than 2025 in the next nine months with some difference potentially in seasonality where 2025 Q2 was relatively strong and Q3 very weak. We believe we'll have a more balanced free cash flow generation in 2026, still with seasonality, but based on the improvements that we are doing and we already see in Q1, including the free cash flow, we believe that we will continue to see performance improvement versus what we have done in 2025, and again, consistent with the guidance. On — go ahead, Antonio, the first question.
So thank you, Jose, for your two questions. I will take the first one. So generally speaking, on profitability and margins globally and in North America, I'm very encouraged by the strong momentum that we started, as you can check by the walks provided. North America improved in volumes, improved in mix, improved in price discipline. And out of the plus EUR 99 million of price positioning year-over-year, actually North America is responsible for EUR 200 million. So what we started, as we said since the beginning, is a trajectory of sequential improvement quarter-over-quarter versus prior year. What we strongly expect for Q2 is to keep on that trajectory and deliver a Q2 which is better than Q2 prior year for sure, working on pricing again, working on volumes, working on mix. And as we did, we started working massively on cost. So we recently launched a global program of cost management that is called VCP, Value Creation Program. This is strong in North America, strong in Europe, strong globally, and we expect to see very encouraging results on costs as well during the year. Thank you very much for your questions.
Can you hear me?
Yes, perfectly.
Thomas Besson, Kepler Cheuvreux. I'd like to dig further on two similar topics, please. On the cash flow side, the improvement you've reported in Q1 has partly been supported by another decline in CapEx and by the seasonality in working capital. I'd like to try to understand what level of CapEx we should expect for the year in 2026, whether it will flatten versus 2025, or whether you think it can further decrease? And on the NAFTA margin, I understand there is some momentum, but looking at the sequential development versus the second half of 2025, you had much higher volumes, a better retail share, much higher V8 revenues, but still we don't see a substantial traction on margins. What do you think is needed for margins to recover to mid-single-digit level, excluding the reimbursement of tariffs that helped a bit in Q1, please?
Okay. I'll take the CapEx question. So CapEx for this year, we expect to be slightly below 7% of net revenues. And the figures that we have incurred in Q1 are consistent with that trajectory, and it's also consistent with the product plan that we will present at Investor Day.
And I will take the other question, which is about margin. So margins are improving already as they are improving along volume mix and price discipline. And what we expect to do for the rest of the year is keep improving. As we said, this is a trajectory. Momentum started. The trajectory will be a trajectory of progressive sequential improvement quarter-by-quarter versus prior year. And we will keep further improving those using price discipline, using mix and working a lot on cost as we started recently our Value Creation Program across all regions, North America and Europe being the two most affected regions on that. We expect this program to deliver results along the next quarters of the year. Thank you very much.
The next question comes from the line of Stuart Pearson from Oxcap Analytics.
So I mean, just to be absolutely clear, and sorry if I'm not really understanding what you're trying to say on the improvement because I get there's an improvement year-on-year, whether that's free cash flow or North America. But of course, the base gets dramatically weaker as the year goes on given the profile last year. So can you just — do you expect to sequentially improve quarter-by-quarter this year in North America profitability and on free cash flow? And I guess then the bigger question is the driver of that. I guess we sort of understand or think we do on the product side. But I just wonder if you can talk a bit about industrial costs and execution there, where there's an opportunity. I guess the IEEPA gain went into North America's industrial cost bucket. So that was still negative in Q1, if that's the case. But how do you expect those industrial costs in North America to develop through the year? And what's driving that?
Yes. Thank you for your question. I will take the first part of your question. I will try to be as clear as you demanded. So yes, we expect to improve margins quarter-by-quarter sequentially this year in North America. We exclude in that the IEEPA refund. But yes, margins will improve in Q2 against Q1. And then for the rest of the year, every quarter we will see an improvement there. And on industrial cost, Joao?
Yes. So we expect for the full year, as we mentioned at the beginning of the year, industrial cost to be a tailwind for Stellantis despite the raw material headwinds that continue to increase. And the primary drivers of this improvement are improvements in manufacturing due to higher volumes, the cost opportunities that we see on product cost. And as we go throughout the year, we're also going to see — start seeing some improvements in warranty as well given the adjustments that we have taken last year.
The next question comes from the line of Patrick Hummel from UBS.
It's Patrick from UBS, and thanks Antonio for clarifying the sequential improvement in North America. I think that's what everyone's focused on today. Can I just ask a bit broader? You also say H2 is going to be better than H1. You haven't touched the full year guide. You have those EUR 400 million IEEPA tailwinds that you probably haven't factored in. Is it fair to say that in the second half we'll see more commodity headwinds than what you initially baked into the guide, that's more or less a wash with IEEPA? Or are the commodity headwinds potentially even larger? Some of your peers have quantified those. It would be helpful if you could help us frame the commodity impact in the course of the year in light of the elevated levels that we're currently seeing.
Yes. Right now, the headwind that we see on commodities versus what we had when we put the guidance together is slightly above the IEEPA credits that we have recognized in Q1.
Slightly above, you said, because it wasn't really audible, sorry.
Yes. Yes, it's slightly above the EUR 400 million IEEPA credits that we recognized in Q1. So it's not entirely a wash. It still has a minor headwind on top of that.
Understood. And if I can follow up, we got the color on North America sequentially. How should we think about Europe and the moving parts here? You've recovered some market share with the STLA smart platform. What about cost initiatives? What about the LCV segment that in good years is a significant contributor, but I guess still well below where you want it to be. Is that going to be a driver in the course of the year, supporting a better AOI? Or should we think about Europe staying close to breakeven levels in the coming quarters?
So maybe I'll take this question, and thank you for that one. First of all, I want to celebrate what Europe did in Q1 because it's important to recognize the team that improved so much sales in a challenging environment, market share that topped 18.1% if we include Leapmotor. And also versus Q4 last year was able to go back to breakeven, which was not the case in Q4 last year. So overall, a sequential improvement in Europe that we celebrate. What we see for the rest of the year in Europe is a strong focus on cost. As I mentioned before, the VCP, the Value Creation Program that we just launched, we will have a lot to share in the Investor Day of May 21 about that. But I can anticipate that it will be strong in North America and strong in Europe. That will be a massive focus. Also, profit per unit will be a focus and improving the mix in light commercial vehicles will be a focus. Those focuses will be able to manage and offset the headwinds that we see. The headwinds we see are basically related to regulation, CO2 emission rules that specifically on light commercial vehicles are not attainable. So while we keep engaging together with our association, ACEA, with a common shared agenda on changing regulation on light commercial vehicles, the focus of Europe will be to deliver sequential improvement as well keeping as North Star breakeven plus for the rest of the year.
The next question comes from the line of Michael Foundoukidis from ODDO BHF.
Two questions on my side remaining. First one, which launches do you consider as the most critical to delivering the expected H2 2026 margin uplift? And where do you see the highest execution or supply chain risk, if any? And maybe a question for Joao then as a follow-up. Others' AOI swung to plus EUR 44 million in Q1. Usually, it's negative that line. We had also revenues up significantly. So what drove this? And is this contribution sustainable into the rest of 2026?
Okay. I'll take the second question. So the other holdings and others was a slight positive, and there are a few factors contributing to that. The first one is financial services profitability increased. The second one is that with the regionalization, there was a reallocation of SG&A costs from the group to the regions to reflect the new organization. And last year, we also had some losses on investments that didn't occur this year. If you are thinking about projecting these results for the coming quarters, holdings and others probably will be between breakeven and slightly negative going forward. That is a good run rate for your assumptions.
And can you please read the first part of your question because I cannot hear you very well?
Yes. Sorry, I was asking which launches are the most critical to delivering the H2 margin uplift that you mentioned? And where do you see, if any, execution risk or supply chain risk for these launches?
Perfect. That's very clear. So what we are seeing already in Q1 and now talking of North America is a very strong profit contribution by our recent launch of the Hemi V8 engine into the pickup trucks. We were anticipating a strong acceleration with that powertrain. We know that that is associated with higher margin than the rest of the lineup. And actually, we are positively surprised by seeing that roughly 40% of the deliveries of the pickup trucks have been with a Hemi V8 engine. So obviously, for the rest of the year in North America, to push on Ram that has been the fastest-growing brand in the region and to have the V8 Hemi engine keep accelerating will be very good for volume, very good for mix and most of all very good for profit per unit and overall profitability. This is one. When we go to Europe, the ramp-up of the smart car launches out of the Trnava plant in Slovakia and the Serbian plant is going very well and is accelerating.
That is good for volume, and those units are profitable, very profitable because those cars are very competitive. The smart car is our most competitive platform and the products that we build in those two plants are among the most competitive in Europe. Finally, in South America, we just started the ramp-up of our midsized pickup truck, Ram Dakota. Ram Dakota joins two things: Ram, which is recognized in South America as a top brand for pickup, and us being strong in the pickup segment in South America, which is the largest profit pool over there. So that will be beneficial for profit, mix and volume. In Middle East and Africa, we are ramping up the plants there, especially in Algeria and in Turkey. In Algeria, we have a very strong leadership position in the market with a dominant market share. In Turkey, we are a leader as well and ramping up production, increasing volume and sales. Both markets in the region represent among the most profitable markets that we have there.
So we have many launches already done and some that are coming that will add volumes, add mix benefits and for some of those very high profit per unit benefits. Regarding supply chain risk, no, we don't see major impacts so far. Obviously, we need to keep monitoring any evolution of the current situation that we have, for instance in Middle East and Africa, given geopolitical tensions. I want to just maybe celebrate that on supply chain risk containment, we have been successful in many regions. Talking of North America, for instance, we were impacted by the aluminum shortage due to a production disruption at Novelis, our aluminum supplier. We were able to contain that risk and avoid losing production. So this is a risk that we usually work very well around. Thank you very much.
The next question comes from the line of Tom Narayan from RBC.
Yes, Tom Narayan of RBC. So I just wanted to clarify what you said on North America margins. So the tariff does get worse, right, because the one-time benefit, EUR 400 million, goes away. So tariffs get worse for the remainder of the year. Raw material, commodity gets worse as well. And even with that, you're going to see sequential margin growth in North America. Is that true? And then the second one, and this may be more for the Investor Day, but Volkswagen this morning announced some big goals, including capacity pruning, especially in Europe, lowering production volumes. Is that something you see as needed, lowering breakeven by cutting production? And are you open to potentially doing partnerships with Chinese OEMs in the U.S.?
Okay. No, thank you for your question. So on margins in North America, yes, they will improve sequentially quarter-by-quarter. So in Q2, we'll see a margin improvement against Q1, excluding the IEEPA impact, which is a one-timer. And then in Q3 we'll keep improving. In Q4 we'll keep improving. That will be a trajectory in North America of margin per unit improving quarter-by-quarter and also improving versus prior year. That means that we will be able to contain what we see today as potential inflationary risks and other risks. How will we do that? As I said, we were able to improve dramatically mix in North America through some pickup truck trims, especially the ones that are equipped with the V8 Hemi engine that represented 40% of the shipments. On that mix lever, we want to keep pushing as we see demand growing and high interest from our customers and orders from our dealers. Then we have new launches and we have the price discipline that we started and we will be committed to.
On top of that, and most importantly probably, globally we launched this cost management program that has high ambitions, high expectations and high commitment from all of us in Stellantis. It will most probably also include fixed cost management, as you mentioned. On all of that, I would invite you to join us at our Investor Day on May 21. That will be, among others, an important topic that we will share and develop altogether. Regarding U.S.-Chinese partnerships, no. We don't see now a U.S.-oriented Chinese partnership. Obviously, we are keen on developing our partnerships in Europe, South America and Middle East and Africa with Leapmotor. Through Leapmotor International, we have a strong commercial cooperation that is helping us grow market share in those regions. We are discussing potential industrial cooperation as well with this partner.
The next question comes from the line of Christian Frenes from Goldman Sachs.
Three quick questions since a lot of them have been asked already. In North America, you benefited from an increase in Ram mix in Q1. I'm wondering when you expect this Ram mix benefit to normalize or stabilize? That's question one. Question two, looking at Europe, vehicle net price was a significant headwind. It seems that the structural reasons for that headwind are not going away anytime soon. So should we expect sequentially that that headwind will continue? And just what are your thoughts on that? And then lastly, on Leapmotor International specifically, it's a really interesting JV. How do we think about profitability for that JV, especially as you sell into Europe?
I will start with North America. We understand that revenue and mix will keep growing in North America along the year. The reason is we see a very strong and robust order portfolio in the truck space and also around the highest-profit Jeep products. Also the Dodge Charger SIXPACK is growing both in volumes and in our order portfolio. Among the Dodge Chargers, the trim powered by our ICE GME Turbo-6 is the one that has the best profit per unit. So mix will be a lever all year. Along with the growth of those cars and trucks, revenue will grow in our plan. For Europe, Europe is facing regulation that is limiting the industry of light commercial vehicles. This is an important point that ACEA as an association is taking as a common agenda. If you look at the average small entrepreneur of Europe — the GDP of Europe is powered by small and midsized enterprises — imagine an entrepreneur who distributes flowers and has five vans and is ready to change them.
If a regulation forces him to buy BEV light commercial vehicles, he will easily check that the total cost of ownership of electric vans is higher than used ones, so he will keep the old vans longer. That will trigger a lose-lose situation: the entrepreneur pays higher maintenance, the industry loses five new vans to build because there are no orders, and the five old ones pollute more than five new ones. So regulation is forcing an unattainable mix of BEV into light commercial vehicles and as a consequence the LCV market is shrinking. This is something we need to offset with cost actions and price actions while engaging the commission as ACEA is doing to change this regulation. Finally Leapmotor International. It's doing well. The Leapmotor offer is BEV only. We sold 24,000 units in Q1 growing in all major markets, the latest being the U.K., and it's profitable. Profit per unit on BEV are strong. Profitability is mainly driven by the high competitiveness of those products and technologies. So it's a good tool for Europe for compliance and, obviously, for profitability and volumes.
The next question comes from the line of Stephen Reitman from Bernstein.
I have two questions, please. Could you comment on the United States, what the channel mix has been like? Has there been any increase in commercial activity in terms of sales to fleet and particularly thinking about daily rental and to other channels? And secondly, Leapmotor: you sell Leapmotor vehicles from existing Stellantis dealerships. What has been your experience of the cross-shopping? And with that strong growth you're seeing in Leapmotor sales, what does it come at the expense of? Has it come at the expense of Citroen or Peugeot or Opel or other vehicles?
Those are great questions. Channel mix in the U.S.: we are growing on all channels. Market share is growing in U.S. retail, is growing in Mexico and is growing in Canada. Fleet sales are back to historic levels — they are not higher than historic levels, just back at those levels. We want to maintain those levels and improve mix in that channel. There are three major sub-channels: rent-a-car, government sales and commercial or small business sales. Governmental and commercial are the highest-profitable sub-channels. We are growing in those and need to keep growing. On Leapmotor International, we are monitoring cross-shopping closely. In Q1, Stellantis grew with and without Leapmotor sales. That means Fiat, Citroen, Peugeot, Opel among others have been growing — Fiat strongly in Italy, Citroen growing in Europe, Opel accelerating in Q1. So we saw general growth of all Stellantis brands in Europe and also growth of Leapmotor which sold 24,000 units in Q1. Cross-shopping has been very limited so far, so we don't see a risk of cannibalization. Citroen is growing through the smart car, Fiat is growing a lot with the Fiat Grande Panda smart car, Peugeot is growing across Europe and Opel is growing with Frontera. So far, Leapmotor's growth has not come at the expense of our core brands.
The next question comes from the line of Horst Schneider from Bank of America.
I have two left. First, we talked a bit about raw materials and the impact from that, but I'm not clear on the guidance for 2026. Globally speaking, is it more than 1% of sales negative impact? And how much have you seen in Q1? If this impact accelerates in the quarters going forward, please clarify. Question two: when I think about your comments about product mix, what impact do you see now from the higher oil price? Is there already a change in consumer behavior? I know the perspective in the U.S. is a little different because fuel prices are lower than in Europe. But I checked that basically a V8 uses 40% more petrol than a V6 and something like 3x more petrol than a PHEV. Don't you think there could be a shift away from V8, and demand shifts more to HEV and to V6 also in the U.S.?
Yes. On raw material, there is a lot of volatility. Based on the current prices that we see in the market, if they persist during the year, net of the hedges, the full impact could approach close to 1% of revenue. The impact in Q1 was still limited because of the curve of the raw materials and also the hedge position that we had at the beginning of the year.
And on oil price, thank you for asking because it is a very important question. We cannot predict how long this oil price surge will stay; it depends on many geopolitical factors. Any external factors will affect the industry. Consumer behavior differs between Europe and North America. In Europe we are seeing strong acceleration of order intake around our battery electric vehicles. This is positive because we can offer among the most competitive BEVs in the market, such as the Citroen C3 BEV and Leapmotor models. In North America, mainly the U.S., the oil price pressure is lower than in Europe. We are registering higher interest in hybrids — hybrids are the fastest-growing powertrain in the market. We offer the Jeep Cherokee hybrid; production is ramping up in Toluca and customers are pleased. This acceleration in hybrid interest is positive for us. On the other side, orders for the Hemi V8 keep coming in and are accelerating: roughly 40% of Q1 pickup truck deliveries were equipped with this engine, which is good for profitability. So we see both strong interest in Hemi and strong interest in hybrids. That's why we plan to deliver more Jeep Cherokee hybrids for the rest of the year.
But more hybrids and more BEV sales mix is margin dilutive or not? It's not a product mix improvement for margin.
You are right when you compare nameplate to nameplate, for example Cherokee hybrid against Ram, but the volumes and the mix we see growing overall with the trucks, specifically with the Hemi V8 engine, will more than offset that partial gap. Ram has been the fastest-growing brand in all regions and pickups are accretive for mix and profit. Within pickup trucks, the fastest-growing powertrain is the most profitable and we see accelerating interest around trucks and Hemi. So overall mix will be positive for the rest of the year.
The next question comes from the line of Henning Cosman from Barclays.
First one on underlying assumptions for the course of the year, specifically again on raw material and also on tariff. On raw material, Joao, I understand you're saying industrial cost positive despite the headwinds from raw material, but could you quantify the raw material headwinds you're expecting and the hedging a little bit? How much are you expecting sequentially perhaps in terms of raw material headwinds? And on tariffs, I'm surprised that with the increase in expected Cherokee and Charger volumes, you're not incurring more tariff headwinds. Do you have any expectation built in for USMCA? Or why is the tariff headwind not increasing upon importing more of these models from Mexico and Canada at the very high tariff rate? Secondly, Antonio, I know we're almost at the CMD now, but I'm surprised it hasn't come up. I wanted to give you the opportunity to comment on the headlines since you've last talked publicly: potential combinations with various Chinese companies in Europe, capacity reduction, focusing CapEx just on the four core brands. Anything you want to comment on before Investor Day?
Okay. So on tariffs, we do not have any different assumptions for USMCA. The projections that we have on tariffs assume the current tariff scheme that we have. The Cherokee and Charger volumes that Antonio talked about and the continued growth were already included in our plan. On raw materials, again, it's very volatile, but the impact in 2026 net of hedge could be in addition to EUR 1 billion.
Thank you for your question, and I'm pleased to meet you at our Investor Day on May 21 where we will touch and share our strategy around the topics you highlighted: brand portfolio management and partnerships. On brand portfolio, we understand the privilege of working with many iconic brands that carry legacy, communities of clients and valuable assets, especially in Europe. The equation we will present at Investor Day is how we expand market coverage of all our brands while being efficient in capital allocation. The solution is to go in parallel on those two drivers and have efficient capital allocation that allows each brand to express its full potential. On partnerships, we have a strong partnership with Leapmotor. We started commercially with Leapmotor International, and it is growing mutual interest in discussing potential industrial partnership. On other potential moves, we will share more at Investor Day on May 21. Thank you very much for your questions.
The next question comes from the line of Christoph Laskawi from Deutsche Bank.
Hi, it's Christoph Laskawi from Deutsche Bank. Sorry to come back on European pricing. Could you comment if the pricing decline was basically driven by LCVs being very negative, or also on the passenger car side? You alluded to CO2 regulation being one driver. Do you expect pricing to be sequentially flat throughout the year in Europe? Or is there increasing pressure and should we expect it to come sequentially down?
Those are important questions. On pricing in Europe, we expect two things: we will keep working on regulation and on pricing we have the opportunity to stay flat on the position that we have, but we have an even larger opportunity to work on cost. As we said, we launched the massive Value Creation Program globally, mainly focused in North America and Europe. That is what we expect on pricing and mainly on cost. Regarding whether pricing decline was driven by LCVs or passenger cars, it is across the lineup. I'm talking about the average. Obviously, mix improves when sales of light commercial vehicles improve, but the comment was on the average price.
Ladies and gentlemen, this was the last question. With this, let me now hand the call back to Mr. Antonio Filosa for the conclusion.
Very well. Again, thank you, everyone, for the time and focus you have put into reviewing our results and listening to our business updates. We look forward to speaking to you next at our Investor Day event on May 21. Thank you again. I'll see you in Auburn Hills. Thank you very much.