The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1625 GMT - European automakers are expected to see a significant impact from a full year of tariffs on 2025 earnings estimates, Bernstein analysts say in a research note. The worst-case scenario remains largely unchanged, aside from the withdrawal of terms that allowed manufacturers to offset exports from the U.S. against imports into the U.S., the analysts say. Stellantis is the worst affected with a 2.8% margin impact under the announced policies. However, Mercedes has a parts manufacturing plant in Mexico, while BMW imports all of its engines from outside of North America, Bernstein says. The analysts remain skeptical that the new tariffs will be long-lasting given their wide-ranging inflationary impacts and the retaliatory actions promised by Canada and Mexico, they say. (nina.kienle@wsj.com)

1452 GMT - Rheinmetall's deep roots in Germany, which represents 25% of its sales, give the German defense company an edge at a time when Berlin is raising military spending, but it also leaves the group dangerously exposed to political turbulence, says Alpha Value's analyst Saima Hussain. Germany is going to the polls on Feb. 23, with military budgets expected to swell if the conservative party the Christian Democratic Union wins, she says. But should the German market unfold in a less favorable way, Rheinmetall can fall back on its internationalization strategy, she adds. This accelerated with acquisitions in Spain and the U.S., and a new joint venture with Leonardo to position Italy as its next major hub for growth. Hussein expects Rheinmetall's momentum to continue, and a ceasefire in Ukraine to offer a good entry point for future investors. Shares are up 0.7% at 761 euros. (cristina.gallardo@wsj.com)

1337 GMT - Canada's industrial sector will likely take the brunt of the U.S. trade tariffs, TD Cowen's Brian Morrison says. In a report, the analyst notes that in particular, Canada' auto suppliers such as Magna International, Linamar and Martinrea will be dragged through the coals, "due to a large proportion of its manufacturing in Canada/Mexico with the U.S. being the end-market for consumption." BRP is also a name he thinks will suffer due to its powersports segment. While the financial impact will be difficult to assess, Morrison says "tariff exposure for each company is material... and will likely magnify production curtailment near-term that is taking hold to balance inventory at auto/powersports dealers." (adriano.marchese@wsj.com)

1253 GMT - Mercedes-Benz objects the imposition of tariffs. The German luxury automaker joins European peers in voicing its opposition to tariffs imposed by the Trump administration. The announcement has triggered a global stock market selloff that has auto stocks among the biggest fallers. "If a general trend toward protectionism gains a foothold, this has negative economic consequences for all stakeholders involved; this cannot be in the interests of politics, business and society," the company says in a statement. "Mercedes-Benz therefore supports a liberal trade order based on World Trade Organization rules, which include the principle that all participants find the same conditions," the company says. Shares fall 4.4% to 56.32 euros. (maitane.sardon@wsj.com)

1221 GMT - Europe's biggest carmaker is confident that talks will avoid a trade war. "We are counting on constructive talks between the trading partners to ensure planning security and economic stability and to avoid a trade conflict," the German company says in a statement. This follows the Trump administration's move to levy U.S. tariffs on goods from Mexico, Canada and China. The announcement triggered a global stock market sell-off, with auto stocks among the biggest fallers. Volkswagen says open markets and stable trade relations are essential for the automotive industry. "We are assessing any potential effects on the automotive industry and our company as a result of the announced tariffs," the company adds. Shares fall 6.3% to 92.44 euros. (maitane.sardon@wsj.com)

1133 GMT - Volvo relies on its strong U.S. value chain to withstand the impact from tariffs, as opposed to other sector peers, the company says. This follows President Trump's decision to place tariffs on hundreds of billions of dollars in imports from Canada, Mexico and China. "As the only truck manufacturer that produces 100% of our trucks for the U.S. in the U.S., we are perhaps more resilient in the relative game for our industry when it comes to tariffs," a company spokesperson says. "We have built up and invested in a strong U.S. value chain, and continue to do so," the spokesperson adds. Volvo is following the developments closely as how the announcement plays out in terms of impact and duration remains to be seen, the company says. Shares are down 1.3% at 302.60 Swedish kronor. (maitane.sardon@wsj.com)

1057 GMT - BMW opposes the imposition of tariffs as these go against the company's guiding principles, the car maker says. This follows Trump's decision to place tariffs on hundreds of billions of dollars in imports from Canada, Mexico and China. "Free trade, which has always been a guiding principle for the BMW Group, is of immense importance worldwide: it is one of the most crucial drivers of growth and progress," a company spokesperson says. "Tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion; in the end, they are detrimental to customers, making products more expensive and less innovative," the spokesperson adds. Shares fall 4.1% to 75.36 euros. (maitane.sardon@wsj.com)

1042 GMT - Porsche AG's possible management changes aren't entirely surprising, but they could add uncertainty in the short term, Stifel's Daniel Schwarz says in a research note. "Since the IPO in October 2022, Porsche's share price has declined by 25%, the EV strategy needs adjustments, China has become a major problem and the company has issued profit warnings. Management changes therefore do not come as a surprise," the analyst says. The German sports-car maker said it is in talks with CFO Lutz Meschke and sales head Detlev von Platen about an early termination of their contracts. The company is due to provide an update on its cost-cutting and product strategy in March, the analyst says. Shares fall 5% amid sharp declines in auto stocks on news of U.S. tariffs on Mexico, Canada and China. (adria.calatayud@wsj.com)

1039 GMT - Kuehne + Nagel and SGS might be potential beneficiaries of new U.S tariffs triggering supply-chain shifts in the mid term, Vontobel analyst Jean-Philippe Bertschy says in a research note. These supply-chain shifts could be triggered by the increased tariffs through pricing effects, where Holcim--among others--could also expect benefits, Bertschy says. The final outcome of this trade war is highly unpredictable with many uncertainties, such as whether the tariffs will be applied to value-added or to the total value of the product, the analyst says. Swiss companies will have to pass on the additional costs to their customers, he says. Pricing power and a strong value proposition will be crucial, Bertschy adds. SGS shares trade 2.1% lower at 86.64 Swiss francs. Kuehne + Nagel shares trade 4% lower at 199.40 Swiss francs. (nina.kienle@wsj.com)

1037 GMT - Stellantis could experience a hit on earnings after U.S. President Trump imposed tariffs on Canada and Mexico, RBC Capital Markets analyst Tom Narayan says in a note. Roughly 5.3 million cars are currently made in Canada and Mexico. The Chrysler parent makes around 580,000 vehicles in these two countries, which represent 11% of total earnings before interest and taxes generating volume. Assuming 70% of this production goes to U.S. customers, where 50% is locally value-added, this could imply a permanent 25% tariff would be a 12% cut to earnings without production shifting, the analyst says. Shares are down 7.6% at 11.98 euros. (andrea.figueras@wsj.com)

0838 GMT - European auto stocks fall after President Trump moved to place tariffs on hundreds of billions of dollars in imports from Canada, Mexico and China. Shares in Jeep maker Stellantis fall 6.2%. Germany's Volkswagen sheds 5.1% and Sweden's Volvo Car is down 4.9%. Porsche AG, Mercedes-Benz and BMW all fall about 4%, while Renault and Ferrari drop 2.2% and 2.3%, respectively. Detroit's big three carmakers, General Motors, Ford Motor and Stellantis, look like the most affected to the announced tariffs, notably GM, analysts at Jefferies say in a research note. The Stoxx Europe 600 Automobiles & Parts sector index is down 3.6%. (adria.calatayud@wsj.com)

(END) Dow Jones Newswires

February 03, 2025 12:20 ET (17:20 GMT)

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