U.S. Tariffs Impact European Carmakers, Triggering Stock Plunge
Amidst concerns over potential tariffs on EU exports, major European carmakers experienced a significant decline in share prices following U.S. President Donald Trump's imposition of new tariffs.
Volkswagen and Stellantis, with substantial operations in Mexico, suffered the steepest losses, plummeting by approximately 6%. Other automotive giants such as Volvo Cars, Mercedes Benz, BMW, and Porsche faced declines ranging from 3.4% to 5.2%.
The French car part supplier Valeo saw a dramatic drop of 7%. Europe's automobile and parts index also retreated by 3.4%, leading the decline across sectors on the broader STOXX 600 index, which slipped by 1.3%.
Analysts express apprehension that the tariffs on Mexico could have a more severe impact on European car manufacturers and their suppliers compared to direct tariffs on EU goods.
"VW's revenues face a potential impact of around 8 billion euros due to the tariffs, while Stellantis may see a hit of approximately 16 billion euros," analysts at Stifel noted.
The estimated full impact of the tariffs could reach 12% of Volkswagen's EBIT in 2025 and 40% of Stellantis'.
Volkswagen expressed hope for negotiations to avert further trade conflicts. JPMorgan analysts anticipate commitments by carmakers to the U.S. regarding job creation and vehicle production in the US.
The tariffs are slated to take effect on Tuesday, raising concerns for the industry.