Some of the world’s leading luxury automotive manufacturers experienced sharp declines in their share prices on Thursday following the announcement of a 25% tariff on all foreign-built cars imported into the United States. The long-anticipated tariffs were confirmed by President Donald Trump on Wednesday evening, prompting an immediate reaction in the stock market.
In Frankfurt, Porsche and Mercedes-Benz shares fell by as much as 5.7%, while BMW declined by 4.9%. Volkswagen AG, the parent company of Audi and Lamborghini, saw a drop of 4.3%. Meanwhile, in London, Aston Martin Lagonda Global Holdings Plc tumbled by more than 5%.
In New York, Ferrari’s stock has rebounded after the tariff announcement but remains down by as much as 5% over the past five days. However, this follows the company’s strong 2024 financial performance, reporting a net profit of $1.58 billion, a 21% increase from 2023.
Ferrari CEO Benedetto Vigna, speaking at CNBC’s CONVERGE LIVE in Singapore earlier this month, stated that the company is “ready with some countermeasures” to mitigate the impact of the tariffs. He added: “We are in a scenario planning phase to manage as best as possible whatever will happen.”
The United States imported $24.8 billion worth of German-built vehicles in 2024, with many German automakers operating U.S.-based factories that produce cars for both local and international markets. However, Porsche remains entirely reliant on imports for its U.S. sales, making it particularly vulnerable to the new tariffs. The American market recently surpassed China as Porsche’s top-selling region. According to Bloomberg, Porsche could face up to $3.7 billion in additional costs due to the 25% tariffs, which will take effect on April 3.
Another luxury brand affected by the tariffs is Jaguar Land Rover, which has seen significant growth in Range Rover and Defender sales in recent years, making the U.S. its largest market. The company imports its vehicles from factories in the UK and Slovakia, and parent company Tata Motors saw its share price drop by 5.5% on Thursday.
As the global auto industry navigates these significant tariff changes, manufacturers will likely be forced to adapt strategies to maintain profitability and new-car market share in the United States. However, this could be good news for the pre-owned luxury and exotic market, as used cars don’t face the same import tariffs.
Sources: CNBC, Bloomberg