- Trump’s prices on Mexico and Canada are now live, and that’s bad news for Detroit’s “Big Three”.
- Barclays analysts said the direct debits could “effectively” eliminate the benefits of Ford, GM and Stellantis.
- The three have factories in Mexico, which is a major hub for the American automotive industry.
Trump’s prices are now a reality, and this is bad news for Detroit car manufacturers.
The 25% of samples from all goods imported from Canada and Mexico, which entered into force yesterday, could have a devastating impact on the “Big” of Detroit de Ford, GM and Stellantis, Barclays analysts warned.
“In short, without any adjustment of car manufacturers (that is to say no price increase, no adjustment in the production plans), we believe that it could effectively erase all the profits of Detroit Three,” the analysts of Barclays Dan Levy and Josh Cho said on Tuesday.
The American automotive industry is strongly tangled with its neighbors in the north and south, with car components often crossing the border several times during production.
As such, the prices promulgated by President Donald Trump – who are finally alive after being interrupted for a month in February – will have an impact on all car manufacturers.
The Alliance for Automotive Innovation, which represents almost all of the main American car manufacturers, warned on Tuesday that import taxes could see the prices of cars increase up to 25%, while the Global S&P data forecastist estimated that a third of vehicle production in North America could be reduced next week.
The actions of Ford, GM and Stellantis all fell on Tuesday in the midst of broader market disorders on the new prices.
Barclays analysts said that no automotive manufacturer is unhappy with prices, Ford, GM and Stellantis – which includes brands such as Jeep and Chrysler – were the most exposed.
The three have factories in Mexico, which have become a hub for car manufacturers thanks to its low labor costs and produce key models for the country’s American market.
Analysts estimated that the prices would add about $ 3,000 to the cost of a vehicle with half of its parts produced in Mexico or Canada. They warned that moving production in the United States would be difficult due to high labor costs and long time adjustment times.
Ford, GM and Stellantis did not immediately respond to requests for comments from Business Insider.
businessinsider
