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Takeaways
- Bank of America analysts say the auto industry is likely to report positive results in the current quarter, but the future remains uncertain.
- Analysts said that companies could cancel or suspend their guidance because of tariffs.
- Analysts at BofA predict that if auto tariffs remain at or near their current levels, production and sales will drop by 3 million units.
Economic uncertainty remains one of the key factors in the outlook for auto industry.
Bank of America analysts wrote Tuesday that they anticipate positive auto industry results this quarter, though uncertainty around tariffs and other factors could cause some companies to pull or suspend their guidance.
Analysts believe that the first quarter has been better than expected, both in terms of sales and production. Americans are “panic purchasing” cars in order to beat the price hikes that many expect after the introduction of auto-specific duties.
The results are less important, as investors will be more interested in the outlooks and increased conversations about tariffs. The bank lowered price targets for multiple carmakers, parts and dealer stocks. One example is Tesla (TSLA), which reported weak deliveries earlier this month and missed Q1 earnings estimates on Tuesday.
Analysts say that tariff uncertainty will make it difficult for companies to predict beyond the first quarter. The bank predicts a drop in production and sales of about 3 million cars if auto tariffs remain at or near their current levels. The bank estimates that this could lower operating profits for General Motors by 11% and Ford by 7%. Suppliers would also see a drop of 10 to 15 percent, while dealers would see a drop between 3% and 5%.
