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DETROIT — Prices of new and used vehicles in the U.S. are expected to notably increase this year amid President Donald Trump's 25% auto tariffs, according to a new analysis from industry experts at Cox Automotive.The automotive data and advisory firm expects the levies to add thousands of dollars to the costs of new cars and trucks — imported and domestic — while also driving up used car prices more than previously expected. Those prices increases are expected despite a potential slowdown in sales compared ...

Core Insights - Pinnacle Mergers & Acquisitions successfully facilitated the sale of Groove Ford and Groove Mazda to AutoNation, enhancing AutoNation's presence in the Colorado automotive market [1][3] - The transaction highlights Pinnacle's expertise and strong track record in the Colorado dealership M&A sector, having completed multiple high-profile transactions [3][4] Company Summary - Pinnacle Mergers & Acquisitions has completed over 850 dealership transactions nationwide, totaling $40 billion in completed transactions [5] - The firm has a combined experience of 85 years, providing expert guidance and customized strategies to drive value in transactions [5] Industry Summary - The transaction reflects ongoing consolidation in the U.S. auto retail space, with large dealer groups expanding into key regional markets to adapt to changing consumer demand [4] - The Denver metro area is identified as one of the most active regions for automotive M&A activity, with strong dealership valuations and high buyer interest [4]

Group 1: Tariff Implementation and Impact - The U.S. has implemented a 25% tariff on foreign auto imports and a 10% baseline tariff on imports, with exemptions for Canada and Mexico [2][4] - Canada retaliated with a 25% tariff on American-made vehicles not complying with the U.S.-Mexico-Canada Agreement, affecting trade dynamics [3][4] Group 2: Effects on Auto Manufacturers - Major automakers like Ford, General Motors, and Stellantis experienced significant stock declines, with Ford dropping nearly 6% and Stellantis down 9.4% [5] - Stellantis announced a temporary shutdown of its Windsor, Ontario plant for two weeks, impacting around 900 workers, and also suspended operations at its Jeep plant in Mexico [6] - Ford is cutting prices to maintain sales, while GM is increasing U.S. pickup truck production and adding jobs to offset potential losses from Canadian plants [7] Group 3: Future Outlook and Industry Challenges - Analysts expect weaker results for automakers in upcoming quarters due to challenges in maintaining sales and margins, with Ford and GM yet to incorporate the latest tariffs into their 2025 guidance [8] - The integrated supply chain of North America's auto industry is under strain from aggressive trade policies, leading to increased costs and potential job insecurity for workers [8]

Core Viewpoint - The implementation of President Trump's 25% tariffs on imported vehicles is expected to significantly impact the automotive industry and investor sentiment, with potential long-term effects on earnings and market dynamics [1][2][3]. Industry Impact - The tariffs apply to vehicles not assembled in the U.S., affecting 46% of the approximately 16 million vehicles sold domestically in the previous year [2]. - Analysts express concerns that prolonged tariffs could lead to a recession in the automotive sector, with significant negative implications for company earnings [2][3]. - The tariffs are anticipated to increase vehicle prices, with estimates suggesting new vehicle prices could rise by as much as $10,000 if costs are fully passed on to consumers [20]. Company-Specific Effects - Automakers such as Volvo, Mazda, Volkswagen, and Hyundai are identified as most at risk, with over 60% of their U.S. sales being imported [11]. - General Motors (GM) is projected to face the highest exposure to tariffs, with estimates indicating a potential 79% drop in earnings before interest and taxes (EBIT) and an 81% decline in earnings per share (EPS) [13]. - Ford is expected to see a 16.5% hit to EBIT and a 23% decline in EPS due to the tariffs [14]. - Tesla, Rivian Automotive, and Lucid Group are positioned more favorably as their vehicles are assembled in the U.S., insulating them from the tariffs [15][16]. Market Dynamics - U.S. auto sales in the first quarter exceeded expectations as consumers rushed to purchase vehicles before the tariffs took effect [17]. - S&P Global Mobility forecasts that U.S. light-vehicle sales could decline to between 14.5 million and 15 million units annually if tariffs remain in place, down from approximately 16 million in 2024 [18]. - Entry-level vehicles, which typically have lower profit margins, are particularly vulnerable to price increases due to the tariffs [18][19]. Supply Chain Considerations - The concept of a fully U.S.-sourced vehicle is deemed unrealistic, as even domestically assembled vehicles rely on a global supply chain for parts [7][8]. - Automakers are awaiting clarity on potential tariffs for auto parts, which could further complicate their supply chain and financial outlook [6][10].

Core Insights - GM and Ford reported significant increases in vehicle sales ahead of the Trump administration's 25% tariffs on imported vehicles, with GM's sales up nearly 17% and Ford's retail sales increasing by 19% in March [1][2] - The tariffs are expected to have a severe impact on the automotive industry, potentially raising new car prices by $4,000 to $12,000, particularly affecting electric vehicles [3] Group 1: Sales Performance - GM's new vehicle sales jumped nearly 17% compared to the first quarter of the previous year [1] - Ford reported a 19% increase in retail sales for March and a 5% increase overall for the quarter, alongside a 94% increase in electric vehicle sales [1] - Hyundai experienced its second-biggest month for sales ever in March, while Toyota reported a 44% increase in US sales of hybrids and electric vehicles [4] Group 2: Impact of Tariffs - The 25% tariffs on imported vehicles are set to take effect, with GM and Ford being particularly exposed due to their manufacturing in Mexico [2] - Analysts have warned that the tariffs could wipe out profits for the Detroit "Big Three" automakers, which include GM, Ford, and Stellantis [3] - Customers are reportedly rushing to buy cars before the tariffs take effect, leading to increased sales across multiple automakers [4][5]

Core Viewpoint - General Motors (GM) is currently positioned as a more attractive investment compared to Ford, driven by its successful cost-cutting initiatives, positive momentum in electric vehicles (EVs), and improving performance in China, while Ford faces significant challenges in its EV segment and pricing pressures [18][19]. Group 1: General Motors - GM retained its title as the top-selling automaker in the U.S. in 2024, with a market share increase of 30 basis points to 16.5% and annual earnings rising 38% to a record $10.60 per share, with expectations for 2025 EPS in the range of $11-$12 [2]. - GM's EV portfolio became "variable profit positive" in Q4 2024, producing 189,000 EVs last year and aiming for 300,000 in 2025, while reducing EV operating losses by about $2 billion this year [3]. - The company reported positive equity income in China in Q4 2024, excluding $5 billion in restructuring costs, and aims for profitability in its China business this year [4]. - GM achieved its $2 billion cost-cutting target by 2024 and expects $1 billion in annual savings from halting robotaxi development, ending 2024 with total automotive liquidity of $35.5 billion, including $21.7 billion in cash [5]. - GM anticipates a slight decline in ICE wholesale volume in North America, with pricing expected to decline by 1-1.5% year over year, which may pressure margins [6]. Group 2: Ford - Ford was the third-best seller in the U.S. in 2024, selling slightly more than 2 million vehicles, with a strong lineup including F-series trucks and new models like Maverick and Bronco [7]. - Ford ended 2024 with around $28 billion in cash and $47 billion in liquidity, reducing net costs by $500 million in the second half of 2024 and identifying $1 billion in product design cost reductions for 2025 [8]. - Ford's Model e segment incurred losses of $5.07 billion in 2024, with expectations of segmental losses between $5-5.5 billion this year due to pricing pressure and increased investments in EVs [9]. - The Ford Blue division is projected to generate EBIT of $3.5-4 billion in 2025, down from $5.3 billion in 2024, with anticipated declines in ICE vehicle sales [10]. - Ford plans to inject up to €4.4 billion ($4.8 billion) into its German operations to reduce debt and improve competitiveness amid challenges in the European auto industry [11]. Group 3: Comparative Analysis - The Zacks Consensus Estimate for Ford's 2025 sales and EPS implies a year-over-year decline of 4% and 27%, respectively, with EPS estimates trending downward [12]. - In contrast, GM's 2025 sales estimates also imply a 4% decline, but EPS estimates are expected to increase by 9%, with upward revisions over the past 60 days [13]. - GM's forward earnings multiple is 4.06X, below its three-year median of 4.96X, while Ford's forward earnings multiple is 7.25X, above its median of 6.44X, indicating GM's valuation is more attractive [14]. - GM has better prepared for potential tariff impacts by cutting international inventory by 30% and optimizing supply chains, while Ford's CEO warned of significant costs and chaos due to tariffs [17].

Core Viewpoint - Ford Motor reported a slight decline in first-quarter U.S. vehicle sales, primarily due to the discontinuation of the Ford Edge SUV, while retail sales showed a positive trend driven by consumer behavior ahead of impending tariffs [1][2][3]. Group 1: Sales Performance - Ford's first-quarter sales decreased by 1.3% compared to the same period last year, largely attributed to the discontinuation of the Ford Edge SUV, which saw a 94% drop in sales as remaining inventory was sold off [2]. - Despite the overall decline, Ford's retail sales increased by 5% year-over-year, with a notable 19% rise in March [3]. - The auto industry anticipated a modest growth in first-quarter vehicle sales overall, expected to be 1% or less, as prices rise and sales incentives are reduced [5]. Group 2: Impact of Tariffs - The sales results come just before the implementation of 25% tariffs on imported vehicles, which are set to take effect this week [4]. - J.D. Power indicated that the prospect of tariffs has already begun to influence consumer behavior, with a 13% year-over-year increase in retail sales attributed to consumers accelerating purchases to avoid potential price hikes [5]. - The auto industry is also awaiting announcements regarding potential additional "reciprocal" tariffs that could further impact automakers [4].

Company Overview - Ford Motor Company is facing challenges in its electric vehicle segment and currently trades 33% below its 52-week high [1] - The company generated $185 billion in revenue in 2024, significantly higher than Nvidia's $130 billion [4] - Ford's stock has a low price-to-earnings ratio of 6.9, indicating a cheap valuation [4] Financial Performance - Ford's net income was $5.9 billion last year, with a profit margin of only 3.2% [5] - The stock offers a solid 6% dividend yield, which may attract investors [2] Electric Vehicle Strategy - Ford has made significant investments in electric vehicles, including the Mustang Mach-E and Ford F-150 Lightning [6] - The company plans to reduce its capital expenditures for pure EVs from 40% to 30% due to pricing and margin pressures [7] - The launch of a new EV pickup truck has been postponed until 2027, and plans for a large EV SUV have been scrapped in favor of a hybrid version [8] Industry Challenges - The automotive industry is experiencing pressure from trade wars, with a 25% tariff on imported vehicles announced by President Trump [9] - The tariffs may cost Ford about $4.5 billion, a reduction from a previous estimate of $6 billion, potentially benefiting U.S.-based automakers [10] Competitive Landscape - The automotive industry is highly competitive, making it difficult for companies like Ford to stand out [12] - Despite being a recognizable brand, Ford faces numerous consumer options, contributing to its low profit margins [13]