Breaking News

U.S. Automakers Tumble on Trade War Worries, 2019 Guidance

All of the Big Three auto manufacturers are trading down today on different news items, as well as broad market headwinds. Fiat Chrysler is leading the race to the bottom following their fourth quarter earnings report; Ford is down around 4.3 percent on news of a $1 billion investment in Chicago manufacturing; and General Motors is down around 3 percent after rising on earnings Wednesday.

In addition to individual news items from the three companies, the market as a whole is feeling a hit. It was reported by CNBC that a “senior administration official” has stated that a meeting between President Trump and Chinese President Xi Jinping was “highly unlikely” to occur before March 1, the official temporary trade war truce deadline established by the two leaders in 2018.

Fiat Chrysler Automobile N.C. shares are trading now by around 12 percent after the company reported its fourth quarter earnings in pre-market Thursday. While their fourth quarter earnings came in strong with a 6 percent year-over-year increase, the market was unimpressed with its 2019 guidance. The company says it expects to earn $7.6 billion in 2019 compared with Wall Street consensus estimates of 8.3 billion. The change is largely due to a Jeep product line reset, as the company begins manufacturing preparation for an all-electric model to be released in 2020.

“I know some people looking at our guidance for 2019 and thinking it is disappointing,” said CEO Mike Manley in the company’s conference call. “But I think we are coming off a record year in 2018 … and I think that it is a bit of a reset in some ways … We’re not happy about it. But we don’t think it is life-threatening in any way.”

Meanwhile, General Motors posted estimate-beating figures Wednesday, and reaffirmed its full-year outlook.

“We navigated significant headwinds in 2018 to deliver another year of strong results, demonstrating the earnings resiliency of this company,” said CFO Dhivya Suryadevara. “The actions we’ve been taking to shape a stronger, more profitable portfolio of businesses position GM for long-term success.”

Regardless of yesterday’s news, General Motors’ stock is trading down today. The drop is likely a result of broad market headwinds as well as falling in sympathy with FCA’s hit. The Dow Jones Industrial Average gave up over 350 points in morning trading on trade war worries.

Ford stock has taken a similar small beating amid trade war concerns, falling 4.3 percent. In addition, the company announced today that it would be investing $1 billion into its Chicago manufacturing plants, and adding 500 jobs in all.

“Today, we are furthering our commitment to America with this billion dollar manufacturing investment in Chicago and 500 more good-paying jobs,” said Joe Hinrichs, who is the company’s president of global operations. “We reinvented the Explorer from the ground up, and this investment will further strengthen Ford’s SUV market leadership.”