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Thomson Reuters
When the Detroit automakers report their profits on Wednesday, they should highlight tapering rates and take advantage of the opportunity to warn investors of much greater suffering if US President Donald Trump imposed Wider rates on vehicles and parts of the industry, consultants and badysts said.
"The automakers really want to get that story out there," said Jeff Schuster, president for the Americas at LMC Automotive consulting firm, who pointed out that it's unusual for General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) show quarterly earnings on the same day.
"The three car manufacturers are on the same page with tariffs," he added. "They can demonstrate the impact so far and warn of the risks to go further."
The shares of the three Detroit automakers drifted down as Trump stepped up commercial threats against China and Europe.
Up here, in an attempt to reduce America's trade deficit with China and protect US industries, Trump has imposed tariffs on imports of steel and aluminum and a whole range of Chinese products, including Chinese vehicles. responded with tariffs on US products, including vehicles.
Metal prices have pushed up steel and aluminum prices, increasing costs and worries in the auto industry, which is expected to lower prices. sales of vehicles in 2018.
the costs of aluminum and steel would hurt the profits of 2018.
"On the expenditure side, these additional costs will weigh on manufacturers' profit margins automobiles, "said Michelle Krebs, an badyst at Cox Automotive. "There is little room to pbad these costs on to consumers."
Detroit automakers are also facing rising costs on specific models thanks to titan for-tat tariffs with China.
GM, for example, imports Buick Envision from China, but has not yet said whether a 25% tariff would require it to raise SUV prices in the United States.
Ford faces a difficult situation in China, with sales down 22 percent in the first five months of the year.
The Lincoln luxury models of the company are all imported to China from the United States, and Ford said it does not expect price increases for the moment.
With Chinese sales already yielding, price increases are seen as a difficult sell for Ford.
"Lincoln will be specifically stillborn in China if he does not eat these functions and that they are important," said the industry consultant and former GM GM Warren Browne.
But overall, these margin breakthroughs are considered minimal in relation to the effect of sweeping tariffs on imported vehicles and parts that Trump has threatened.
U.S. US Secretary of Commerce, Wilbur Ross, said Thursday that it was "too early" to say whether the administration would charge tariffs, even though many automakers think it's a foregone .
Administration officials stated that potential tariffs are in part designed to obtain concessions during the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and the United States. Mexico.
About 40% of the content of vehicles sold by GM in the United States comes from outside the United States, compared with 45% for FCA and 20% for Ford, according to data from the firm. Edmunds.com.
"The problems that automakers are currently facing are a drop of water in the ocean compared to what could happen," said LMC's Schuster.
GM has already warned that higher tariffs on imported vehicles to study by the Trump administration could cost jobs and lead to a "smaller GM" while isolating US companies from the market world.
A group representing major automakers said Thursday that the imposition of 25% tariffs on imported cars and parts would raise the price of US vehicles by $ 83 billion a year and would cost hundreds of thousands of jobs.
Due to the trade war between China and the United States, Germany Daimler has reduced its earnings forecast for 2018, preventing sales of its Mercedes-Benz, and BMW said that he was considering "strategic options".
There is also the risk that Trump unilaterally withdrew from NAFTA. Last year, the Boston Consulting Group estimated that US rates in the range of 20 to 35 percent would add $ 16 to $ 27 billion a year to the costs of automakers and their suppliers if the United States United were leaving NAFTA.
"It would be a disaster, both in the short term and in the long run," said Mr. Browne, who expects the Detroit automakers to address these issues on profit appeals. to prepare investors and warn Washington. "Look for them to be very vocal."
(Reportage of Nick Carey and Ben Klayman, edited by Phil Berlowitz)
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