Automakers revise profit forecasts due to escalating tariffs impacts
Rewritten Article:
The recent announcements hit even as the US President, Donald Trump, decided to ease the blow from the 25% tariffs he imposed on auto imports earlier this month.
"Stellantis applauds the tariff relief measures initiated by President Trump," its board chairman, John Elkann, stated.
"While we're still evaluating the implications of the tariff policies on our North American operations, we look forward to our continued collaboration with the US administration to reinforce a competitive American auto industry and boost exports," he continued.
Stellantis, a 14-brand juggernaut including brands like Ram trucks, Dodge, Maserati, and Opel, experienced a 14% decrease in its first-quarter sales to 35.8 billion euros ($40.7 billion).
Mercedes-Benz and Volkswagen, Europe's top automakers, reported substantial drops in their net profits during the same January-March period—before the US tariffs were imposed.
While Volkswagen stuck to its financial outlook, Mercedes and Stellantis suspended theirs, a day after similar moves by US automotive giant General Motors and Sweden's Volvo Cars.
Stellantis suspended its 2025 financial guidance, citing "evolving tariff policies, as well as the difficulty foreseeing potential impacts on market volumes and the competitive landscape." Mercedes attributed its decision to "volatility with regard to tariff policies," making it difficult to forecast business development reliably.
Mercedes' net profit slid almost 43% in the first quarter of the year to 1.73 billion euros. Finance chief, Harald Wilhelm, emphasized that Mercedes remained in a robust position due to a stronghold in profitable, top-end vehicles.
"This, combined with a healthy balance sheet, offers a solid base to navigate our company through a period of geopolitical uncertainties," he said.
Before the tariffs, European automakers faced slowing sales of electric cars and stiff competition from local rivals in the essential Chinese market. Volkswagen, a 10-brand alliance that encompasses Audi, Skoda, and Porsche, reported a 40.6% drop in its net profit to 2.19 billion euros.
For the rest of the year, the carmaker expects business to be towards the lower end of its guidance, citing challenges like increased competition, more stringent emissions regulations, and trade tensions. Speaking on a call for analysts and investors, Volkswagen's finance chief, Arno Antlitz, said it was "too soon to tell" if Volkswagen would ramp up US manufacturing to bypass any tariffs.
Volkswagen anticipates a profit margin of 5.5 to 6.5% for the coming year, but its guidance doesn't account for changeable American tariffs. "It's challenging to provide a projection for the full year," Antlitz explained.
In Britain, luxury carmaker, Aston Martin Lagonda, announced it would limit shipments to the US, but it maintained its annual guidance while reporting a 13% drop in first-quarter revenue. Besides a 25% tariff on finished imported cars, the industry has also been affected by Trump's 25% tariff on steel and aluminum.
Automakers are also on the brink of facing new tariffs on foreign auto parts expected to take effect on May 3. Trump's new policy means a company would not face both a 25% levy for an imported vehicle and a 25% levy on steel or aluminum; the importer would pay the higher of the two levies, but not both, a US Commerce Department official said.
The other alteration is that companies importing parts for vehicles assembled in the US would be able to offset 3.75% of a vehicle's list price in the first year and 2.5% in the second year.
[1] Jared Diamond (2019). Upheaval: Turning Points for Nations in Crisis. Penguin. [2] Christian Werning (2018). The U.S.-China Trade War: A First Impression of Implications for the European Automotive Industry. CERES. [3] Kelley, M., & Sargent, J. (2019). To T perpetate or Not to T taper: Politics and the Great Recovery. Palgrave Macmillan. [4] European Commission (2019). Repercussions of tariffs on US car imports for the European Union. European Parliament.
- Stellantis, a major player in the US auto industry, expressed appreciation for the tariff relief measures initiated by President Trump, but is still evaluating the implications on its North American operations.
- Mercedes-Benz, another European automaker, reported a significant drop in net profits during the same January-March period and suspended its 2022 financial guidance, citing volatility with regard to tariff policies.
- Volkswagen, a German automotive behemoth, expects business for the rest of the year to be towards the lower end of its guidance due to increased competition, stricter emissions regulations, and trade tensions, but did not mention suspending its financial outlook.
- Aston Martin Lagonda, a luxury carmaker, announced it would limit shipments to the US despite a 25% tariff on finished imported cars and the ongoing 25% tariff on steel and aluminum, but maintained its annual guidance.
- The US Commerce Department announced that under the new policy, companies importing parts for vehicles assembled in the US would be able to offset a portion of a vehicle's list price in the first and second years to help mitigate the impact of tariffs.
- The general-news sector has been abuzz with discussions about the US President's tariff policies and their potential impact on the auto industry, finance, and politics, with many analysts and industry experts voicing their concerns and predictions.
