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The Zacks Analyst Blog Highlights: Daimler, Ford, Volkswagen, Fiat and Ferrari

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For Immediate Release

Chicago, IL –July 30, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Daimler (DDAIF - Free Report) , Ford Motor (F), Volkswagen Aktiengesellschaft , Fiat Chrysler (FCAU - Free Report) and Ferrari (RACE - Free Report)

Here are highlights from Friday’s Analyst Blog:

US to Put Auto Tariffs On Hold: Will Euro Carmakers Gain?

On July 25, the meeting between President Donald Trump and European Commission President Jean-Claude Juncker at the White House eased trade war fears between the two economies. The two world leaders hinted at working toward “zero tariffs” on several major industrial products. Additionally, Trump has signaled at refraining from imposing heavy tariffs on auto imports from EU countries while negotiations continue.

After months of uncertainty, Trump and Juncker’s constructive approach has lessened rising auto tariff concerns. This is definitely good news for Euro auto giants, mainly because high auto tariffs would have raised overall production cost, as pointed out by a European Commission report.

How the Entire U.S.-EU Tariff War Turned?

The “tit-for-tat” tariff war started last month after the United States slapped tariffs of 25% on steel imports and 10% on aluminum imports from EU countries. The European Commission quickly took "rebalancing measures” by imposing import tariffs of 2.8 billion euros or more than $3.2 billion on a variety of American products.

Following this turn of events, the American President threatened to levy a tariff of 20% on cars and other automobiles imported from EU countries. In fact, before the start of the Jul 25 meeting the President threatened to raise auto tariffs to as much as 25%. However, the meeting turned out to be “a big day” for the U.S.-EU trade relationship, with Trump calling it “a new phase.”

Both the world leaders pledged to work toward “zero tariffs, zero non-tariff barriers, and zero subsidies” on all industrial products, excluding automobiles. For automobiles, Trump hinted at putting any import tariffs on hold when he said that the United States will not go “against the spirit” of the meeting.

Even Juncker said that if negotiations between the United States and the 28 nation economic bloc continue, the EU will “hold off further tariffs” and may reconsider “existing tariffs on steel and aluminum."

Reducing Trade War Fears Lift Automakers’ Sentiment

According to a European Commission report released last month, a 25% auto tariff will lead to an addition of extra 10,000 euros or $11,700 to the production cost of any European-built car imported to the United States. In this context, reduced tariff concerns boosted the sentiment for Euro auto manufacturers.

Following this, Peter Altmaier, Germany’s Federal Minister for Economic Affairs and Energy called the Jul 25 meeting a “breakthrough.” He added that the outcome of the meeting will “avoid trade war and save millions of jobs.”

According to the U.S. Census Bureau, the United States imported passenger cars worth of $53.5 billion in 2017. Car imports for Germany came in at $6.1 billion while the United States imported cars worth $1.9 billion from the United Kingdom. Germany and the U.K. are the third and fifth largest car exporters to the United States.

Given this scenario, major German car makers will register significant gains in the coming months. Some of these companies are Mercedes-Benz-maker Daimler AG, Ford Motor Company and Audi-maker Volkswagen Aktiengesellschaft. Volkswagen has a Zacks Rank #4 (Sell).

Other companies that could gain from these latest developments are British automaker Fiat Chrysler Automobiles N.V. and Italian auto giant Ferrari N.V.

Summing Up

Undoubtedly, the European auto industry had a bad phase recently, after continued trade tariff concerns. However, positive outcome from the Jul 25 meeting between President Trump and European Commission President Juncker boosted sentiment. Euro auto makers welcomed the world leaders’ decision to call truce to trade war and are expected to register significant gains in the days to come.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.




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Daimler AG (DDAIF) - free report >>

Fiat Chrysler Automobiles N.V. (FCAU) - free report >>

Ferrari N.V. (RACE) - free report >>

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