General Motors Company (NYSE:GM) has been downgraded to ‘Neutral’ from ‘Buy’ by analysts at UBS, who also slashed their price target on the automaker to $51 from $64 to reflect the impact of tariffs on cost structure and auto demand.
For 2025, the analysts now assume General Motors’ North America volumes will decline 9% year-over-year, down another 4% in 2026.
Vehicles produced in Mexico and Canada are estimated to have approximately 50% US content. As a result, a 25% tariff is applied to 50% of the assumed $35,000 material cost per vehicle, will lead to an effective increase of $4,300 per vehicle for those made in Mexico or Canada.
For vehicles manufactured in Korea and China and sold in the US, analysts apply a 25% tariff on the full vehicle cost, which is estimated at $25,000, resulting in a $6,250 tariff increase per vehicle.
“We estimate that if left unmitigated, the annual cost headwind could be approximately $5 billion,” they wrote.
They assume General Motors will look to offset 50% of the cost via price.
What to expect from Q1
UBS expects General Motors to deliver a beat for the first quarter given pricing held up better than expected.
They forecast North America EBIT of $3.5 billion, about 12% above the consensus.
Their earnings per share estimate of $2.89 is 9% above the consensus of $2.65.
“We would not be surprised to see guidance withdrawn given the ongoing macro and tariff-related uncertainty,” the analysts added.
Shares of General Motors fell following the release of the UBS report, down 6.7% at about $43 in the early afternoon on Thursday.