Zacks Industry Outlook Highlights Tesla, General Motors and Blue Bird

In This Article:

For Immediate Release

Chicago, IL – April 8, 2025 – Today, Zacks Equity Research discusses Tesla, Inc. TSLA, General Motors Co. GM and Blue Bird Corp. BLBD.

Industry: Autos (Domestic)

Link: https://www.zacks.com/commentary/2441194/3-domestic-auto-stocks-to-watch-amid-growing-economic-uncertainty

The Zacks Domestic Auto industry’s outlook remains robust despite rising economic uncertainty. While the newly introduced tariff by President Trump and projected slower economic growth can decelerate the momentum of auto sales, the introduction of affordable EV options is expected to drive the prospects of the industry. Auto players like Tesla, Inc., General Motors Co. and Blue Bird Corp. are likely to weather the effects of the newly introduced economic policies by minimizing the affordability concerns and catering to a wider customer base.

Industry Overview

The Zacks Domestic Auto industry includes companies that are engaged in designing, manufacturing and retailing vehicles across the globe. These include passenger cars, crossover vehicles, sport utility vehicles, trucks, vans, motorcycles and electric vehicles. The industry, which is highly consumer cyclic and provides employment to a large number of people, is at the forefront of innovation, courtesy of its nature and the transformation that it is going through.

The widespread use of technology and rapid digitization are resulting in a fundamental restructuring of the automotive market. Several companies in the industry have engine and transmission plants, and conduct research and development, and testing of electric and autonomous vehicles.

Factors to Shape the Industry's Prospects

Higher Tariff to Hurt Margins: In the United States, auto prices are already near record levels. The newly introduced tariff by President Trump will only exacerbate the affordability issues. While many goods may see price hikes, imported cars and auto parts will be hit the hardest and impact millions of buyers. With average new car prices already near $50,000, the tariffs could push costs even higher, making cars less affordable for many Americans. If automakers try to absorb rising costs from tariffs, it will put a strain on their margins.

Economic Uncertainty to Affect Demand: The automotive industry is cyclical, with sales and production fluctuating in response to economic conditions, consumer confidence, technology and regulations. For 2025, the Fed expects slower economic growth, cutting its GDP forecast from 2.1% to 1.7%. It also raised its core inflation estimate to 2.8% from 2.5%, and slightly increased its year-end unemployment projection from 4.3% to 4.4%. Projected slower economic growth is likely to take a hit on the demand of the highly cyclical automotive industry.


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