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Thanks to a reliance on imports, Stellantis stock could be stuck in reverse
4 hours ago
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UBS has downgraded Stellantis from Buy to Neutral in response to Trump’s tariffs.
The automaker imports roughly 35% of vehicles they sell in the United States.
Sales are down and the company could have trouble recuperating market share.
Tariffs, should in theory, help American automakers, but that’s not exactly the case. Quite the opposite as a number of them import vehicles and parts from other countries.
This is hardly a shocking revelation, but Wall Street is worried and the stock market has been on a roller coaster ride as of late. The latest warning sign comes from UBS, which has downgraded Stellantis to neutral. This follows a similar downgrade for General Motors.
Seeking Alpha reports that UBS analyst Patrick Hummel pointed to the 25% automotive tariff as hitting Stellantis harder than some of its rivals. This is due to the fact that roughly 35% of sales in the United States come from imported vehicles.
Among them are the Chrysler Pacifica and Dodge Charger Daytona, which are made at Windsor Assembly in Canada. South of the boarder, there’s Toluca Assembly which builds the Jeep Compass and Wagoneer S EV. Mexico is also home to the Saltillo Truck Assembly Plant, which builds heavy duty Ram pickups.
This presents a significant problem, but imports aren’t the only issue. U.S. sales have been falling and Hummel believes the company will have a hard time regaining market share, especially as demand softens. This could potentially lead to losses and a negative free cash flow.
The downgrade doesn’t appear to have had much of an impact as Stellantis stock closed up 5.64% at $9.37 per share. That’s slightly less than Ford, which climbed 4.07% to close at $9.71.