The GM logo can be observed on a water tank at the General Motors assembly facility located in Ramos Arizpe, Coahuila state, Mexico, on February 11, 2021.
Daniel Becerril | Reuters
As automotive stocks responded to the recent tariff announcement from Washington, D.C., on Thursday, General Motors experienced the most significant decline.
GM shares dropped over 6% during mid-morning trading, notably lagging behind competitors such as Ford and Stellantis, which saw declines of approximately 2% and 1%, respectively. In contrast, Tesla shares rose by more than 5%.
This disparity is attributed to the volume of vehicles imported by GM, particularly its reliance on Mexico.
Deutsche Bank analysts remarked, “Tesla and Ford are likely shielded from these changes, given the locations of their vehicle assembly plants, even though Ford does face some risk with imported engines. GM has the highest vulnerability due to its exposure to Mexico.”
On Wednesday, President Donald Trump declared a 25% tariff on “all vehicles not manufactured in the United States,” along with some car parts. The executive order signed that day includes provisions for components compliant with the United States-Mexico-Canada Agreement, although immediate clarity regarding possible exemptions for the North American auto industry was lacking.
GM stock declines following the tariff announcement by Trump.
In 2024, Mexico accounted for 16.2% of vehicle imports into the U.S. as a percentage of sales, according to GlobalData. This was the highest share of any country, nearly double that of South Korea and Japan, which were second and third, respectively, in import volume.
Research conducted by Barclays analyst Dan Levy indicated that around 52% of GM vehicles sold in the U.S. during the first three quarters of 2024 were assembled domestically. This left 30% assembled in Canada and Mexico, with another 18% imported from other countries.
Levy further noted that GM heavily relies on Mexico and South Korea for the production of certain small crossovers, including the Equinox and Blazer models.
“While about half of GM’s U.S. sales are manufactured here, the concern lies with imported parts,” he stated.
During the same period, 57% of Stellantis vehicles and 78% of Ford vehicles sold in the U.S. were produced domestically. According to Levy, Stellantis has 39% of its U.S.-sold units assembled in Canada and Mexico, while Ford has 21%.
Emmanuel Rosner from Wolfe Research mentioned that the tariffs mainly affect foreign-brand automakers, though he pointed out that 15% of GM’s U.S. vehicles are sourced from South Korea.
John Murphy at Bank of America remarked that relative to the broader automotive industry, GM is “considerably exposed to the tariffs” and may need to reassess its production strategy.
Year to date, GM shares have fallen by 13%. The stock experienced a sharp drop in late January after investor concerns grew regarding the company’s lack of a plan to address tariff issues in its latest earnings call.
