A 25% tariff on vehicles not assembled in the U.S. has been implemented. Last year, 46% of the approximately 16 million vehicles sold in the U.S. were imported. The tariffs are expected to impact the automotive industry significantly. S&P Global Mobility reports that Volvo, Mazda, Volkswagen, and Hyundai Motor (including Genesis and Kia) are most at risk, with at least 60% of their U.S. sales being imported in 2024. Ford, General Motors, Toyota, Honda, and Stellantis, which produced 67% of U.S. passenger light vehicles in 2024, will also be affected, with 57% of the value content in U.S.-assembled vehicles being imported. Bernstein estimates that GM could see a 79% drop in earnings before interest and taxes, an 81% decline in earnings per share, and a $4.1 billion hit to free cash flow. Ford’s estimated impacts are a 16.5% hit to EBIT, a 23% decline in EPS, and a 36% drop in free cash flow. Stellantis is expected to face a $1 billion EBIT impact, an 8.75% lower net income, and a $540 million hit to free cash flow. Tesla, Rivian, and Lucid are better positioned due to U.S. assembly. U.S. auto sales in the first quarter exceeded expectations, but S&P Global Mobility predicts a potential drop to 14.5-15 million units annually if tariffs persist, compared to 16 million in 2024. New vehicle prices, averaging $48,000, could rise by up to $10,000 if tariffs are fully passed to consumers.
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