DETROIT (Reuters) - Tariffs were partly to blame for lowered full-year forecasts by General Motors Co (GM.N) and Fiat Chrysler Automobiles NV (FCA) (FCHA.MI)(FCAU.N), pummeling the stocks of both automakers on Wednesday as investors feared escalating trade disputes would hurt margins and sales.
GM cited higher steel and aluminum costs for its 2018 profit forecast reduction as a result of tariffs imposed by U.S. President Donald Trump’s administration, sending its shares down 7 percent.
Chief Financial Officer Chuck Stevens said GM put in a “solid performance” in the second quarter “despite some fairly significant headwinds that have built throughout the year.”
Stevens told analysts GM would partially offset the commodity hit by negotiating price reductions with suppliers, raising prices on more popular models, and cost cutting.
In FCA’s case, Chinese demand slumped in the quarter ahead of a July cut in import duties, resulting in higher incentive spending and an increase in unsold vehicle stocks that “particularly affected Maserati,” new Chief Executive Mike Manley told analysts on a conference call.
Manley said “very, very cost conscious” Chinese consumers sat on the sidelines during the second quarter waiting for prices to come down. A rise in the group’s inventory will continue to impact results as stocks are cleared ahead of new emissions regulations, he added.
FCA shares were down 15 percent on the New York Stock Exchange.
The automakers’ results were overshadowed by news former CEO Sergio Marchionne died after suffering complications from surgery.
FCA said it has fixed-price contracts for most raw steel through 2018, but would see increases in 2019 at current prices.
The warnings from both automakers come amid growing fears over a trade war. Economists polled by Reuters said a now-robust U.S.
