Investing.com -- Goldman Sachs has downgraded Ford Motor (NYSE:F) to Neutral from Buy amid a more difficult macroeconomic and competitive environment for U.S. auto manufacturers.

The bank said its previous cyclical view on Ford ”had been too positive,” highlighting that consensus earnings estimates for 2025 have fallen by 32% since Ford was added to the Buy list in September.

Goldman Sachs acknowledged Ford’s progress on net cost reductions and the potential for its U.S. manufacturing footprint to mitigate tariff impacts. However, it pointed to several headwinds, including weaker consumer demand, rising tariff-related costs, and increased international competition.

“While we still see a long-term opportunity from the shift toward software & services as well as cost reductions, we move to a Neutral rating to reflect a more difficult cyclical dynamic,” the analysts wrote.

The downgrade comes amid a broader reassessment of the U.S. auto sector. Goldman cut its forecast for U.S. light vehicle sales to 15.40 million units in 2025, down from a prior estimate of 16.25 million, and lowered global auto production projections due to tariffs and softer demand.

“We believe the tariffs as proposed will raise the cost of both importing and manufacturing vehicles in the U.S. by at least a low to mid single digit thousand dollar level on average,” the report said.

“We believe it will be hard for the auto industry to fully pass this on, especially with softening consumer demand more generally,” it added.

Alongside Ford, Goldman also downgraded two auto suppliers—Lear Corporation (NYSE:LEA) and Visteon Corp (NASDAQ:VC)—to Neutral, warning that tier 1 suppliers may struggle to offset falling volumes.

Simultaneously, it upgraded BorgWarner (NYSE:BWA) and Sensata Technologies Holding NV (NYSE:ST) to Buy thanks to their relative insulation from U.S. tariff exposure and strong positioning in hybrid and internal combustion engine products.

Aurora Innovation Inc (NASDAQ:AUR) was also raised to Neutral from Sell as strategists believe the market is now focused on the long-term viability of autonomous trucking rather than short-term commercialization timelines.

Goldman Sachs projects that new vehicle net prices in the U.S. will increase by approximately ~$2-$4 thousand dollars over the next six to twelve months to better reflect tariff costs.

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