In response to growing tariff uncertainty, several global automakers, including Stellantis and Mercedes-Benz, have suspended their respective annual financial guidance reports for investors in addition to those from Michigan’s General Motors and Volvo.
The announcements on Wednesday came as US President Donald Trump eased the impact of his earlier this month’s executive order on Tuesday by signing an executive order.
We look forward to working with the US administration to advance the impact of the tariff policies on our North American operations and encourage exports, according to Stellantis board chairman John Elkann in a statement.
Due to changing tariff policies, as well as the difficulty predicting potential effects on market volumes and the competitive landscape, Stellantis stated that it was “suspending its 2025 financial guidance.”
This comes as a result of layoffs at Stellantis, a car company that operates 14 brands, including Maserati, Jeep, RAM, Dodge, and Fiat. It temporarily laid off 900 workers for two weeks in April, claiming that the delay was caused by uncertainty about how Trump-imposed tariffs would impact the company.
In a company-wide email, Antonio Filosa, Stellantis’ chief operating officer for the Americas, stated that the company has “decided to take some immediate actions” in addition to the medium- and long-term effects of these tariffs on its operations.
In its first-quarter earnings report on Wednesday, the business reported a 14-percent decline in sales for the quarter, reaching $ 40.78 billion (35.8 billion euros).
Before the US tariffs began, Mercedes-Benz and Volkswagen, two of Europe’s biggest car manufacturers, both reported significant declines in their net profits.
Mercedes cited “volatility with regard to tariff policies,” which meant predicting business growth couldn’t be accurately predicted. In the first three months of the year, Mercedes’ net profit decreased by almost 43 percent to $1.9 billion (1.73 billion euros).
Finance chief Harald Wilhelm praised Mercedes’ continued position as a leader because of what he claimed was a strong position in high-end, profitable vehicles.
A strong foundation can be built upon this, he said, adding that a strong balance sheet and a stable balance sheet will help us navigate our business during a turbulent time of geopolitical uncertainty.
“Towards the lower end”
According to an analysis conducted by the news agency Reuters, about 40 businesses across all industries have cut or lowered their forward guidance during the first two weeks of the first-quarter earnings season. Snap, a social media company, declined on Tuesday to provide forecasts for the future, citing a slowdown in ad spending decline that had raised doubts about advertising budgets as a result of the impact of the tariffs, sending its stock down 15% on Wednesday.
Before the tariffs, European automakers already faced declining sales of electric vehicles and fierce competition from Chinese electric vehicles, which is a significant market. Volkswagen, a 10-brand group that includes Porsche, Skoda, and Audi, reported a net loss of 40.6 percent to $ 2.49 billion (2.19 billion euros).
The carmaker stated for the rest of the year that it anticipated business to be “to the lower end” of its guidance, citing difficulties like increased competition, stricter emissions standards, and trade tensions.
Volkswagen’s finance director Arno Antlitz said it was “too early to say” if Volkswagen would start ramping up production in the US to avoid any tariffs during a conference call for analysts and investors.
Volkswagen’s guidance does not account for changeable American tariffs, but it anticipates a profit margin of 5.5 to 6.5 percent for the upcoming year.
Giving a projection for the entire year is extremely challenging, according to Antlitz.
The German group’s outlook did not “include any impact of US tariffs,” according to UBS analyst Patrick Hummel, who wrote in a client note, calling it “essentially a withdrawal of guidance.”
Luxury car manufacturer Aston Martin Lagonda announced that it would restrict shipments to the United States, but it kept up its annual target despite reporting a 13% decline in revenue for the first quarter.
easing some tariffs
Trump’s 25-percent tariff on steel and aluminum has also had an impact on the industry, along with a 25-percent tariff on finished imported cars.
Additionally, foreign auto parts are set to be subject to new tariffs, which are anticipated to go into effect on May 3.
With Trump’s new policy, a business would not have to pay a 25% levy on imported vehicles and a 25% duty on steel or aluminum. A representative from the US Commerce Department said the importer would pay the higher levies, but not both.
The second change is that businesses that import parts from US-made vehicles can cover 3.75 percent of the list price for the first year and 2.5 percent for the second year.
However, according to analysts, this reprieve won’t always work in practice because automakers will be faced with business disruption from tariffs.
Source: Aljazeera
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