Estimated component cost per vehicle: $35,000
Foreign-sourced parts: 50%
Tariff rate on imports: 25%
Estimated annual tariff cost: ~$5 billion
UBS price target revised from $64 → $51
Rating changed from Buy → Neutral
Opinion
Given GM’s production structure—heavily reliant on assembly in Canada and Mexico—it is among the most directly exposed U.S. automakers to Trump’s tariff measures. The combination of a worsening cost base and weakening domestic demand suggests a limited near-term recovery path for earnings.
Core Sell Point
With a multi-billion dollar annual increase in fixed costs looming, GM is facing a tangible mid-term profitability threat. The margin compression risk is no longer theoretical—it’s materializing.
UBS has downgraded its rating on General Motors (GM) from Buy to Neutral, citing mounting cost pressure under the Trump administration’s new high-tariff policy. The bank also cut its price target from $64 to $51, a reduction of roughly 20%.
UBS analysts noted that many GM vehicles are assembled in Canada and Mexico, with an estimated $35,000 worth of components per vehicle. Assuming 50% of those parts are foreign-sourced and applying a 25% tariff rate on imported parts, GM's annual tariff burden could reach approximately $5 billion.
UBS also warned that domestic auto demand may soften, further weighing on GM’s earnings outlook. With GM’s Q1 2025 earnings report due on April 29, this downgrade could heighten market sensitivity ahead of the results.
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