Ford and GM Shares Fall After Downgrade

NEW YORK (Reuters) – Shares of Ford Motor (NYSE:F) and General Motors (NYSE:GM) declined by approximately 5% on Wednesday following a downgrade by Morgan Stanley analysts. The analysts cited a challenging market environment characterized by decreasing prices and increasing competitive threats, particularly from China.

Market Challenges

Legacy U.S. automakers are grappling with high inventories, falling prices, and signs of weakening consumer demand. In contrast, manufacturers from Japan, South Korea, and electric vehicle makers are steadily increasing their market share.

Competitive pressures from China, which produces 9 million more cars than it sells domestically, are also impacting U.S. automakers.

Downgrades

• Ford was downgraded from “overweight” to “equal weight” with a price target reduced from $16 to $12. Following the news, Ford’s shares dropped over 4% to $10.43, marking its largest daily decline since early August.
• General Motors was downgraded from “equal weight” to “underweight” and its price target lowered from $47 to $42. Its stock fell 5.4% to $45.50, the most significant daily decline since early September.

Other Downgrades

Electric vehicle maker Rivian (NASDAQ:RIVN) and Canadian parts manufacturer Magna International (NYSE:MGA) were both downgraded from “overweight” to “equal weight.” Rivian’s shares fell 5.7%, while Magna’s declined by 4.7%.

Upgrades for Dealerships

In contrast, several car retailers and dealerships, including Penske Automotive, Asbury (NYSE:ABG) Automotive, and Sonic Automotive (NYSE:SAH), received upgrades from Morgan Stanley. Unlike manufacturers, these dealerships benefit from favorable consumer and brand exposure, are less affected by Chinese competition, and earn recurring profits from vehicle service and parts sales.
– Penske’s shares rose 0.5%, Asbury gained 2%, and Sonic increased by 0.3%.