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The General Motors logo is displayed prominently on a water tank at the company’s assembly plant in Ramos Arizpe, Coahuila, Mexico, as of February 11, 2021.
Recent tariff announcements from Washington D.C. have sparked significant fluctuations in auto stocks, with General Motors experiencing a notable decline.
During mid-morning trading on Thursday, GM shares plummeted over 6%, contrasting sharply with Ford and Stellantis, which saw decreases of approximately 2% and 1%, respectively. Meanwhile, Tesla’s stock experienced an upswing of more than 5%.
This disparity in stock performance can be attributed to GM’s considerable reliance on imported vehicles, particularly from Mexico.
Analysts from Deutsche Bank highlighted that “Tesla and Ford seem to be more insulated due to the locations of their assembly plants,” although it’s important to note that Ford still faces some exposure concerning imported engine components. “GM, on the other hand, has the highest exposure to Mexico,” they noted in their Thursday report.
On Wednesday, President Donald Trump announced a significant policy change, including a 25% tariff on all vehicles not manufactured in the United States, as well as certain auto parts. Although the executive order did include provisions for components complying with the United States-Mexico-Canada Agreement, the specifics regarding potential relief for the North American automotive sector remain uncertain.
Data from GlobalData reveals that in 2024, Mexico constituted 16.2% of all vehicle imports into the U.S., making it the top country for imports, nearly double the proportions from South Korea and Japan, which ranked second and third, respectively.
Research conducted by Barclays analyst Dan Levy indicates that approximately 52% of GM’s U.S. sales in the first three quarters of 2024 came from domestically assembled vehicles. The remaining figures show that 30% were assembled in Canada and Mexico, while 18% were imported from other nations.
Levy further noted GM’s significant dependency on Mexico and South Korea for its small crossover models, including the Equinox and Blazer. He remarked, “While about half of GM’s U.S. sales are produced domestically, the importation of parts poses a noteworthy risk.”
In contrast, during the same period, Stellantis and Ford showed stronger domestic assembly figures, with 57% and 78% of their respective vehicles sold in the U.S. being manufactured within the country. Additionally, Stellantis produced 39% of its U.S.-sold units in Canada and Mexico, while Ford’s figure stood at just 21%.
Emmanuel Rosner from Wolfe Research commented that the new tariffs mainly affect foreign automakers; however, he pointed out that GM does import 15% of its vehicles from South Korea.
Bank of America analyst John Murphy evaluated GM’s position in the context of the overall automotive market, stating that the company is “relatively exposed to the tariffs” and may need to consider adjustments in its strategy.
As of now, GM shares have decreased by 12% year-to-date. The stock faced a significant drop in late January when concerns emerged regarding the company’s failure to adequately address tariff implications in its most recent earnings report.
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