In This Article:
UBS is dialing back on General Motors (GM), downgrading the stock to Neutral from Buy and lowering its price target to $51 from $64 amid concerns that tariffs will slash future sales and earnings.
Yahoo Finance Senior Reporter Pras Subramanian joins Market Domination to break down the expected volume declines and the $5 billion headwind General Motors could face this year.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Time now for our call of the day. UBS downgrading General Motors from buy to neutral. Going lukewarm here, the impact of tariffs on auto demand among the reasons for the downgrade. And for more, we're bringing, of course, Yahoo Finances very own senior auto reporter, Pras Subramanian. Pras.
I think we should have like an AT&T sponsor for that call of the day, like a little phone call, you know, like, bought you buy, you know. Anyway, yes, uh, downgrade to neutral from buy. Uh, price target goes down to 51 from 64. It's all about tariffs hitting sales, uh, and also, uh, earnings, right? And also, their cash flow, right? So, UBS expects volumes to drop 9% in 2025, an additional 4% in 2026. That's not nothing. That's a that's a pretty big dip in volume. And that would lead also, with all the tariff costs from exposure to Canada, to Mexico, even South Korea, apparently. China, we know they build a Buick in, um, in Vista there, I believe. Um, it's a $5 billion cost headwind that they see this year. And with a company like GM that has pretty big capital return plans, that's a huge hit to their to that to that program. And the question is, will they continue with that? Uh, what happens when earnings come out in a couple weeks? Will they pull all their guidance, all that other stuff? So, that's the problem. UBS says here, I want to quote something here. They say that the world, the new world of auto tariffs will be here for, quote, the foreseeable future. And then also, they see a world and auto world with, quote, sustainably lower volumes and higher costs to produce a vehicle going forward. So, that's sort of the the the landscape that they see with GM and and others obviously in the in the big three. But in particular, GM, with their big exposures to Canada and Mexico, this is a problem for them.
Yeah. People wanted certainty. What if the certainty is not great? Here's our example. Thanks, Pras.
