AUTO stocks around the world slumped on Monday (Feb 10) after US President Donald Trump’s new tariffs threatened to cut into sales from factories in Mexico and Canada.
Shares in Toyota Motor and Nissan Motor dropped in Asia trading, while Volkswagen (VW) and Stellantis led the steepest intraday decline in European auto stocks since April. General Motors (GM) and Ford Motor were down in US premarket trading.
Trump’s 25 per cent tariffs on goods from Mexico and Canada, set to start on Tuesday, are throwing decades-old supply chains into question, particularly for carmakers from around the globe that have set up manufacturing hubs in Mexico, largely to supply the US market. German auto suppliers operate more than 330 sites in Mexico, while the country’s automakers own several factories there that produced 716,000 passenger cars in 2023.
The levies add to an already difficult time for carmakers that are grappling with weaker demand in key markets, especially for electric vehicles (EVs), and intensifying competition from Chinese manufacturers. A stock index of European automakers and parts suppliers has fallen about 12 per cent in the past year.
VW, which manufactured more than 500,000 vehicles last year in Mexico, fell 6.7 per cent, while Stellantis, the next biggest European producer there, declined 7 per cent. While Toyota’s stock closed 5 per cent lower, Nissan plunged as much as 10 per cent before paring losses.
In addition to Ford and GM, EV makers Tesla, Rivian and Lucid were also down in US pre-market trading.
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Shares of luxury car makers BMW and Mercedes-Benz Group also fell 6.5 per cent and 5.3 per cent, respectively. BMW, which employs about 3,700 workers at its plant in San Luis Potosi, produced 95,151 vehicles in Mexico last year, according to the country’s statistics agency.
As for auto parts suppliers, Valeo and Forvia are likely to be among the hardest hit, according to Oddo BHF analysts led by Michael Foundoukidis. Valeo shares fell 9 per cent, while Forvia declined 13 per cent.
VW produced 526,535 in Mexico last year, according to the statistics agency. The company has major manufacturing sites in places including Puebla and San Jose Chiapa, and employs thousands of workers there.
“Import tariffs on cars sold in the US but produced outside of the US have direct consequences on the profitability of manufacturers,” Moritz Kronenberger, a portfolio manager at Union Investment, said. “Prices are expected to rise by several thousand US dollars to offset the tariffs, which will in turn impact sales volume.”
Daimler Truck Holding shares tumbled 5.8 per cent. The German firm’s Freightliner brand leads the US truck market, selling about 90,000 vehicles annually. The company builds a large share of its US-bound Freightliner trucks in Mexico, with plants in Santiago Tianguistenco and Saltillo, Coahuila. It also operates parts distribution centres in Canada and Mexico.
Oddo’s Foundoukidis said Renault is one of the least exposed European car stocks to the tariffs on Mexico and Canada. Renault shares fell 4 per cent. BLOOMBERG
