Garrett Motion Inc.

What they do

Garrett designs, manufactures, and sells highly engineered turbochargers, air and fluid compression systems, and high-speed electric motors for original equipment manufacturers (OEMs) and independent aftermarket distributors in the mobility and industrial fields. Its products serve internal combustion engines using gasoline, diesel, natural gas, and hydrogen, as well as zero-emission vehicles. The company also provides solutions for commercial vehicles, industrial applications, and the aftermarket.

Revenue drivers

• Gasoline turbochargers — Largest product line, accounting for 43% of Q2 2026 net sales ($416 million). Growth driven by new application launches and program ramp-ups in Europe, India, and South America.
• Diesel turbochargers — Second-largest line at 24% of Q2 2026 net sales ($235 million), supported by strong demand for light commercial vehicles and pickup trucks in Europe, Asia, and South America, and program ramp-ups in India.
• Commercial Vehicles / Industrial — Represented 19% of Q2 2026 net sales ($188 million), driven by strong on-highway demand in China following program launches and North America genset (power generation) for data centers.
• Aftermarket — Contributed 12% of Q2 2026 net sales ($119 million), with volumes increasing in Europe, China, and Australia, contributing to a favorable product mix.

Recent performance

In Q2 2026, net sales totaled $976 million, up 7% year-over-year (5% on a constant currency basis), including a favorable $15 million foreign currency impact. Net income was $101 million (10.3% margin), and Adjusted EBIT was $152 million (15.6% margin), up from $124 million (13.6%) in Q2 2025. Net cash from operating activities was $145 million, and adjusted free cash flow was $122 million. The company repurchased $28 million of stock during the quarter.

Strategy

Garrett's strategy is twofold: expand turbocharger leadership across passenger and commercial vehicles, maritime, industrial, and aftermarket; and apply its differentiated technologies to develop new solutions for E-Powertrain (traction) and E-Cooling compressors. In 2025, approximately 50% of RD&E expenditure was focused on Electric Compression and E-Powertrain technologies. The company is also developing larger turbochargers, including the Garrett MEG product line for marine and industrial applications such as backup power generation for data centers. Management highlights wins in turbo technology for data centers, industrial air compression, and a pre-development commercial vehicle e-powertrain with a Japanese truck maker.

Risks

• Automotive industry transition — A faster-than-expected shift to battery electric vehicles (BEVs) could reduce demand for turbochargers, where the company generates higher margins, and may shift sales toward lower-margin applications.
• Technological disruption — If the company fails to innovate in response to changing customer needs, such as hybrid and electric powertrains, its business could suffer.
• Macroeconomic and geopolitical pressures — Trade tensions, geopolitical conflicts, and economic slowdowns in regions like China and Europe could adversely affect global automotive production and demand.
• Customer concentration — The company relies on sales to major OEM customers, and any loss or reduction in orders from these customers could materially impact results.

Outlook

Management increased the full-year 2026 outlook following strong Q2 results, driven by share-of-demand gains and robust commercial vehicle and industrial performance. For 2026, S&P expects light vehicle production to decrease slightly from 2025, while KGP expects a slight increase in commercial vehicle production. Management continues to monitor macroeconomic and geopolitical developments that could impact the industry and operations.