Fitch Ratings revised its 2025 global automotive sector outlook to "deteriorating" from "neutral" on Wednesday, citing US tariffs on imported vehicles imposed on March 26. The agency warns that these tariffs are likely to trigger "production cuts and increased costs, potentially driving issuers' profitability and FCF (free cash flow) margins below rating sensitivities in the short term."
"The relative strength of the US and Chinese automotive markets, which supported the ‘neutral’ outlook at end-2024, is faltering due to weakening consumer demand driven by tariff-related uncertainties and potential price hikes … Fitch expects that both suppliers and automakers will share the burden of the higher tariffs,” the agency said.
Since the Trump administration ramped up its tariff policy, Fitch has revised outlooks across sectors such as energy, banking, automotive, and global trade with China.
