GM, Ford shares tumble after UBS downgrades cite weakening demand

DETROIT — Shares of Common Motors and Ford Motor every tumbled Monday after a pair of UBS downgrades citing expectations for weakening demand amid inflationary pressures.

Ford’s inventory was down by greater than 8% throughout intraday buying and selling earlier than closing at $11.37 per share, a decline of 6.9%. GM was off by as a lot as 7.5% earlier than closing at $32.29 per share, down by 4%.

Each GM and Ford shares are off about 45% 12 months up to now. Each firms have a market capitalization of slightly below $50 billion.

UBS analyst Patrick Hummel wrote in notes to traders Monday that he expects the U.S. automotive business to be difficult for the foreseeable future following file revenue amid low provides and excessive demand through the coronavirus pandemic.

He predicted “it would take three to 6 months for the auto business to finish up in oversupply, which is able to put an abrupt finish to a 3-year part of unprecedented” pricing energy and revenue margins for the automakers.

The funding agency downgraded Ford to “promote” from “impartial” and GM to “impartial” from “purchase.”

UBS continues to choose GM over Ford on account of its momentum with electrical automobiles and fewer issues with manufacturing through the third quarter. Hummel mentioned UBS expects a “stable quarter” for GM, which is scheduled to report third-quarter outcomes on Oct. 25.

Ford final month mentioned components shortages have affected roughly 40,000 to 45,000 automobiles, primarily high-margin vans and SUVs that have not been capable of attain sellers. Ford additionally mentioned on the time that it expects to ebook an additional $1 billion in surprising provider prices through the third quarter.

Ford is scheduled to report third-quarter outcomes on Oct. 26.

— CNBC’s Michael Bloom contributed to this report.