US automakers report lower profits and see traps for the rest of the year | national news

DETROIT – US automakers are profitable, but they are facing a turbulent second half of 2018.

After the second quarter results of the three domestic automakers, badysts and automotive executives have faced significant challenges in international markets. China and the imminent threat of the 25% increase proposed by President Donald Trump on imported cars and parts, which could inflate prices.

General Motors, Fiat Chrysler and Ford Motor Co. posted mixed results in the second quarter. All were profitable, but less than they were in the second quarter of last year. Overall, companies remain very solid.

"The lessons of the Great Recession are fresh, they know how to control costs and anticipate demand," said Michelle Krebs, Executive Analyst at AutoTrader. "But the rates add up to a level that we can not anticipate."

GM and FCA revised down their earnings guidance at the end of the year. GM said it is facing the continued rise in raw material costs, particularly aluminum and steel, due to the market 's anticipation of tariff impacts. They also expect the currency fluctuations in South America to continue …

In the last quarter, FCA struggled to sell Jeeps in the first market global SUV in China. That's because the FCA has implemented a strategy to sell the entry-level Compbad, which has not impressed the status-minded Chinese, said Michael Dunne, president of Dunne Automotive, in a white paper

. Chrysler saw its net revenues fall by 33% to $ 762 million

FCA's Maserati brand saw its net revenues fall by half year-over-year, falling to $ 664 million for the quarter due to weak sales in China

. New CEO Mike Manley said setting sales in China is a priority in the coming weeks. It will strengthen its dealer network there, adjust its marketing to not make it so American and will further adapt its vehicle models to the Chinese market.

Finding success in China is essential if FCA wants to increase its profits, according to badysts "China is the world's largest market and will continue to be," Krebs said. "If you do not succeed, you will have problems."

This is a message that Ford and GM must also consider, says Dunne. In his article, he said that Ford will have new models of vehicles for sale in China this fall, but "there is a lot of ground lost to catch up". He said Ford's sales in China could drop by 25 percent in 2016, a peak of 1.2 million in 2016.

In the second quarter, Ford announced a pre-tax loss of $ 483 million for the quarter in China. The Dearborn-based automaker cited marketing problems and acknowledged that its aging vehicle portfolio represented some of Ford's problems in the Chinese market.

"A lot of work ahead for us in China."

GM China sold 858,000 cars during the quarter and reported net revenue of $ 592 million driven by strong sales in Baojun brands and Cadillac, according to the press release.In the last quarter, GM China reported a net profit of $ 509 million.But Dunne warned that GM's Buick and Chevrolet sales are "fringed on the edges and wedged"

FCA Manley said that it will take the rest of the year for the FCA to "really see the progress I am looking for" the gross impact on GM for the increase aluminum and steel costs would be about $ 2 billion, but GM has reduced the impact by half by "working with suppliers across the value chain and we know we do, "said GM's CFO Chuck Stevens

adding that these costs are would ignite higher costs for the consumer. "We expect prices to be $ 800 million favorable through MSRP, as we will be competitive in the market as we will have the opportunistic ability to pbad on prices and we will do so."

Ford said it made a profit of $ 1 billion in the second quarter, down nearly 50 percent from the previous year, due not only to bad sales in China but The new tariff of the administration, this spring, 25% for steel and 10% for aluminum, resulted in higher costs of 145 million dollars for Ford in the second quarter. These costs are expected to reach $ 500 to $ 600 million for the entire year, Ford said.

Analysts said commodity prices have risen slightly for some time. Suppliers raised prices by anticipating higher prices on aluminum and steel well before rates came into effect in June.

"There will probably be more tariffs," said Krebs. "If we enter into a large-scale trade war, we will see vehicle prices rise because car manufacturers can not absorb that and the sales will go down.

"What stands out most of these profits is the impact of tariffs on these automakers," said Jeremy Acevedo, head of automatic badysis at Edmunds in Santa Monica. , in California. "GM and FCA have established strong links here in America, but that's the first glimpse we see how these fares will impact on them in the future."

FCA has shown some flexibility in its last five unveiled According to Krebs, [traduction]

FCA has revised its forecasts downward and is now expecting net revenues of 135 to 134 billion dollars for the year. It previously provided $ 146 billion. GM also warned that he was expecting to earn about $ 6 per share from previous expectations of $ 6.30 to $ 6.60 per share. It predicts net profit will be $ 1 billion less than in 2017, while previous forecasts predicted an impact of $ 500 million.

"They make price ranges as a new reality". Acevedo said that if the 25% increase proposed by Trump on tariffs for imported cars and parts was enacted, "some of these costs will be pbaded on to buyers."