Trump′s trade policies already hitting GM, Fiat Chrysler | Business| Economy and finance news from a German perspective | DW | 25.07.2018
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Trump's trade policies already hitting GM, Fiat Chrysler

Shares in GM and Fiat Chrysler have tumbled after both automakers cut their full-year profit forecasts. Analysts say soaring inputs costs as a result of US metals' tariffs are already having an impact.

US automaker General Motors on Wednesday cut its full-year profit forecast, in part due to higher commodity costs caused by a growing global trade war.

GM cited a "significant" increase in input costs, as well as the plummeting value of the Argentine peso and Brazilian real, which have impacted revenues from those South American markets.

The biggest US automaker reported second-quarter profit of $2.4 billion (€2.05 billion), up 44 percent from a year ago following solid sales growth in China — where it delivered more than 858,000 vehicles in the second quarter, and North America — where sport utility vehicles, pickups and other large vehicles have seen double-digit increases.

Revenues were $36.8 billion, down 0.6 percent from a year ago.

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GM's Chief Financial Officer, Chuck Stevens, said the auto giant still sees US car sales coming in above the solid level of 17 million vehicles for all of 2018, but views the outlook for 2019 as up in the air due to doubts about US trade policy.

"I think there's a lot of uncertainty in this space at this point in time. We're going to have to see where it lands and how ultimately that impacts the US industry and the global industry frankly," Stevens said.

Donald Trump at US motor museum (picture-alliance/AP Photo/E. Vucci)

US automakers have made their concerns known to Trump as the spectre of new tariffs on foreign cars looms

The auto giant has been outspoken about US President Donald Trump's decision, earlier this year, to impose tariffs on foreign steel and aluminum, as well as his pledge to introduce duties of up to 25 percent on foreign vehicles and parts. The firm said his move could "lead to a smaller GM."

All cars made in US factories include parts from foreign manufacturers.

GM shares were down 7.3 percent in midday trading in New York.

Read more: EU ramps up attack on Trump auto tariff plans

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Meanwhile, Fiat Chrysler Automobiles (FCA), the Italo-American carmaker, reported a sharp drop in profits on Wednesday — the same day it announced the death of its charismatic ex-boss Sergio Marchionne.

The 66-year-old stepped down at the weekend following complications from surgery and later died from cardiac arrest, according to Italian media reports.

FCA said its adjusted net profit in the second quarter of 2018 was down year-on-year by 9 per cent to €981 million ($1.15 billion). Net profit fell by 35 per cent to €754 million.

Read more: Shark in a sweater: Sergio Marchionne's legacy at Fiat Chrysler

The poor results were influenced by slumping sales in China, particularly for Maserati sport cars.

But several financial analysts, including Vincenzo Longo of investment house IG, and Fawad Razaqzada of Forex.com, warned that soaring input costs were likely to hamper FCA's growth going forward.

Shares in FCA plunged more than 15 percent in Milan trading to €13.99, a 10 month low.

mm (AP, dpa, Reuters)

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