Munich • Investors in European carmakers are once again facing months of share volatility after the US circulated a draft report on tariffs and European Commission President Jean-Claude Juncker signalled a cease-fire in the looming trade war may soon come to an end.
The report is part of the US Commerce Department’s probe into whether to impose levies on automobiles, vans and light trucks, as well as car parts.
Commerce has until February to hand its findings to US President Donald Trump, who previously threatened a 25% tariff on imported cars.
European carmakers, despite exemptions for their output from US and Mexican factories, will be hardest hit, alongside imports from Japan and South Korea, RBC Capital Markets analysts said yesterday.
Suppliers will have even more difficulties from a similar levy on parts imports, according to the bank, citing an estimate from the American Automotive Policy Council pointing to a US$2,000 (RM8,386) increase in the cost of a US-manufactured vehicle and a US$2,400 rise when tariffs on steel and aluminium are added.
The European Union (EU) last year shipped 1.1 million cars to the US, led by Volkswagen (VW) brands, Audi and Porsche, and BMW.
The planned US tariffs would hit autos and parts worth €58 billion (RM272.54 billion), the Commission said in June, adding about €10,000 to the price of a European-built car.
Flaring trade tensions between the US and the EU led to a temporary truce in July after Juncker met with Trump in Washington. Juncker signalled on Monday that the hiatus may only last until year-end.
On the brighter side, BMW AG produces about 70% of its SUVs in the US, and Mercedes-Benz-maker Daimler AG about one-third.
Among Japanese automakers, over 90% of Honda Motor Co’s vehicles destined for the US market are manufactured in North America and more than half of those made by Toyota Motor Corp.
Carmaker shares were flat following the news on the next steps in the US probe, with BMW trading at €72.46 at 12pm in Frankfurt yesterday, while VW stock rose 0.01%.
The sector has battled multiple challenges this year, with trade tensions having led to several profit downgrades. The Stoxx Europe 600 Automobiles & Parts Index has slump 22% since the start of the year. — Bloomberg