Fitch Ratings Adjusts Global Automotive Sector Outlook

Fitch Ratings has recently shifted its 2025 global automotive sector outlook from "neutral" to "deteriorating", attributing this change to the US tariffs on imported vehicles implemented on March 26. The agency highlights potential repercussions, including production cuts and increased costs, which may adversely affect profitability and free cash flow margins in the short term.

Impact on US and Chinese Markets

The once robust US and Chinese automotive markets, which previously upheld a neutral outlook by the end of 2024, are now showing signs of weakness. This is due to waning consumer demand, fueled by uncertainties surrounding tariffs and anticipated price increases. Fitch anticipates that both automakers and suppliers will bear the brunt of these heightened tariffs.

Broader Sector Revisions

Following the Trump administration's escalation of its tariff policy, Fitch has revisited outlooks across various sectors. Notable areas affected include energy, banking, the automotive industry, and global trade relations with China, signaling widespread implications of the tariff adjustments.