Barclays on Tuesday downgraded U.S. autos and mobility sector to “negative” from “neutral”, warning that President Donald Trump’s tariffs could pressure automakers’ earnings and curb investments.
The comments echo those cited by Goldman Sachs last week, when the U.S. brokerage cut its estimate for automobile sales in the country for this year by nearly 1 million units.
Trump’s tariff policy has been constantly evolving, and while he temporarily paused levies on most imports and exempted certain Chinese products, duties on autos, steel, and aluminum remain unchanged.
“Amid a highly challenging environment, making a near-term investment case for the autos sector is increasingly difficult,” Barclays analyst Dan Levy said.
“Auto tariffs are seemingly here to stay, and valuations are seemingly not pricing in full tariff risk.”
Barclays downgraded General Motors (GM-N) to “equalweight” from “overweight”, saying that nearly half of the company’s vehicles sold in the U.S. are assembled outside the country, with its affordable EVs being made in Mexico.
The British brokerage “modestly” prefers Ford (F-N) as a greater proportion of its vehicles are assembled in the U.S.
Barclays also downgraded stocks of auto technology companies Aptiv (APTV-N), Mobileye Global (MBLY-Q) and Visteon Corp. (VC-Q), saying automakers could push back on adding more technology due to pricing concerns.
Shares of General Motors, Aptiv, Mobileye and Visteon fell between 1-3%, while Ford was down 0.31% in premarket trading.
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