(Reuters) – European and U.S. automakers are expected to lose up to 17% of their combined annual profits if the United States imposes tariffs on imports from Europe, Mexico and Canada, the company said. rating agency Standard & Poor’s Global Ratings (S&P Global) in a report on Friday.
The high-end manufacturers Volvo and Jaguar Land Rover, which produce mainly in Europe, and the General Motors and Stellantis groups, which assemble significant volumes of cars in Mexico and Canada, are the most exposed to the threat of increased customs tariffs, according to S&P.
“Mitigation measures will make potentially higher tariffs manageable,” the rating agency emphasizes.
However, S&P adds that the combined effects of tariffs, stricter CO2 regulations in Europe from 2025 and pressure from increased competition in China and Europe could increase downgrade risk.
“Rating changes could occur if tariffs are added to other headwinds by 2025,” the agency adds.
According to S&P, the worst-case scenario for automakers includes 20% tariffs on U.S. imports of light vehicles from the EU and the UK, as well as 25% tariffs on imports from Mexico and Canada.
In this scenario, GM, Stellantis, Volvo and Jaguar Land Rover could see more than 20% of their adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) projection at risk in 2025, according to S&P’s analysis.
The risk estimated between 10 and 20% for Volkswagen and Toyota, and less than 10% for BMW, Ford, Mercedes-Benz and Hyundai.
(Alessandro Parodi in Gdansk, Elena Smirnova, edited by Augustin Turpin)
Copyright © 2024 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
