Automobile companies such as BMW, Volkswagen, Stellantis, and others, are substantially affected by Trump's tariffs, as evidenced by recent stock market trends.
Revamped Take on the Auto Crisis:
The Sledgehammer Swings: A looming 25% tariff on automotive imports under Trump's orders is wreaking havoc on German and European carmakers' stocks. What's the current state of the markets?
Stock exchanges could experience a bleeding day for European automakers and related suppliers, based on pre-market trading on a tense Thursday. Volkswagen shares plummeted by over 3%, BMW by 2.5%, and Mercedes by 2%. Stellantis is teetering on the brink of its record low with a near 5% drop.
The Cause of the Ruckus
At the heart of the issue are 25% tariffs, which threaten all imported cars—from small hatchbacks to limos, SUVs, and commercial vehicles. These import taxes will extend to critical car components too. Geopolitical tensions with the European Union may lead to these tariffs, which are set to take effect from April 3.
The Association of the German Automotive Industry (VDA) predicts devastating economic repercussions from Trump's proposed US car tariffs. According to VDA President Hildegard Müller, these tariffs could burden companies and disrupt the intricate global supply chains of the automotive industry. Ultimately, consumers in North America will feel the pinch, as the USA is the primary sales market for the German automotive industry, according to the Federal Statistical Office.
Divergent Prognoses by Analysts
JPMorgan has opted to hold its “Overweight” rating for BMW despite the tariffs, citing potential cost burdens of €1 billion for the brand. In the ensuing days, German manufacturers and Stellantis are expected to lay out plans to ramp up local US production and adjust prices in response to the tariffs, according to JPMorgan.
Conversely, Barclays has raised its price target for BMW shares from €68.50 to €73.50 while downgrading them from "Equal Weight" to "Underweight." Analyst Henning Cosman's operational forecasts for BMW are up to 15% below the consensus in his latest assessment. His price target is the lowest on the market, making him one of just four skeptics. Despite the tariff headwind, Cosman still prefers Mercedes-Benz over BMW in direct comparison.
This article contains information from dpa-AFX.
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Conflict of Interest Note: The publisher Börsenmedien AG's board and majority shareholder, Mr. Bernd Förtsch, holds positions in the financial instruments mentioned in this publication or related derivatives. These positions could potentially benefit from the price movements resulting from this publication.
- The looming tariffs on automotive imports, as per Trump's orders, could potentially burden European carmakers, such as Volkswagen, BMW, and Mercedes-Benz, due to the financial implications on their stocks and operations.
- JPMorgan maintains its "Overweight" rating for BMW amidst the proposed US car tariffs, suggesting the potential for adaptive strategies like increasing local US production and adjusting prices to mitigate the financial impact.
