Morgan Stanley, Javier Martinez Olcoz and Ross MacDonald study the possible scenarios of a tariff increase on imported cars from Europe and possible tax cuts.
European cars have a tariff increase of 2.5% while American cars sold in Europe have a tariff increase of 10%. Tariffs for trucks and vans are 25%.The cars most at risk of a rate increase are SUVs and sedans, but precisely the price elasticity is higher in this premium segment. However, it is clear that a tariff increase will affect investors’ interest in the sector and reduce manufacturers’ volume aspirations. Porsche, BMW and Mercedes are the most exposed.
In the case of a tax cut from 21% to 15-20% the effect on bpa is small (1.5% – 2.5%), the biggest beneficiary is Stellantis followed by BMW and Mercedes. Javier and Ross remain cautious in the sector.
