On April 2, US President Donald Trump reaffirmed the implementation of a 25% worldwide import tariff on all automobiles and automobile parts imported into the US, with the exceptions related to the United States-Mexico-Canada Agreement, as initially announced on March 26. The automobile industry will not be subject to the reciprocal tariffs announced on April 2. Thus, we reaffirm our estimate of a negative impact of between 20% and 30% on our fair value estimates for no-moat auto original equipment manufacturers resulting from these tariffs. Despite the downward revisions under this scenario, we continue to believe that there is a sufficient margin of safety at current prices, as shares trade at a significant discount to our valuations. BMW BMWKY and Mercedes MBGAF export approximately 50% of their US production, which may be affected by retaliatory tariffs, possibly increasing the negative impact on our fair values.
Among the European auto OEMs, as tariffs stand, and considering their proportion of US-sourced content and USMCA compliance, we estimate Stellantis STLAM is the most negatively affected by US import tariffs impacts, followed by Mercedes, BMW, and Volkswagen VLKAF. Meanwhile, Ferrari RACE and Porsche POAHY are the most exposed. However, their superior pricing power and the positive effect that price increases have on the residual values of their customers’ existing cars reduce the overall impact of tariffs on their financials. This applies more so to wide-moat Ferrari than narrow-moat Porsche.
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