S&P Global: Tariffs to weigh on already depressed global auto sales

The global auto industry is facing a major headwind due to the tariffs imposed by President Donald Trump, according to Vittoria Ferraris, EMEA Autos Managing Director at S&P Global Ratings. In a recent interview with CNBC Africa, Ferraris highlighted the significant impact of the trade war on the global auto sector, indicating that it could result in billions of dollars or euros in losses. Ferraris emphasized that the trade war has disrupted the previous dynamics where the US and China served as export hubs for the industry. As a result, automakers are now compelled to regionalize their operations, leading to inefficiencies and increased capital allocation. This necessitates adaptation and efforts to protect the supply chain from the repercussions of the trade war. When questioned about the survival of auto industries in emerging markets like South Africa amidst the tariff changes, Ferraris acknowledged the potential negative spillover effects on many countries beyond the major markets of US, China, and Europe. She cautioned that the global trade war could hinder Chinese automakers' access to the US market due to aggressive international strategies. In response to the query about potential beneficiaries of the tariffs, Ferraris dismissed the notion of any winners in the trade war. She highlighted the detrimental impact of diverted funds on investments during a crucial period of technological transition in the auto industry towards clean mobility and software-defined vehicles. Ferraris expressed concerns about the European carmakers, particularly their reliance on the mature and profitable US market. She noted the challenges faced by European automakers, including regulatory pressures for electrification in Europe and competition from China in other markets, further exacerbated by the tariff situation. Furthermore, S&P Global Ratings has revised its outlook for electric vehicle (EV) growth in the US and Europe, projecting a sluggish period with potential declines in sales and production through 2026. The industry is expected to face a significant setback, as pricing constraints and limited volume recovery prospects add to the challenges. Overall, the global auto industry is confronted with a challenging landscape marked by trade uncertainties, regulatory demands, and technological transitions. The implications of the tariffs imposed by President Trump are reverberating across regions, posing a formidable test for automakers and suppliers as they navigate through a period of uncertainty and adaptation.