BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
On Wednesday, General Motors (NYSE:GM) stock continued to demonstrate resilience in the face of a broader slowdown in the U.S. automotive sector. According to a recent report from Bernstein, the company outperformed its peers in February 2025, showcasing strong volume momentum and effective pricing and inventory management strategies.
The U.S. automotive industry experienced a general deceleration in February, with most Original Equipment Manufacturers (OEMs) witnessing a performance dip. Despite this trend, GM emerged as a notable exception, registering a 9% year-over-year (yoy) increase in U.S. volumes for the month. This growth contrasts with the industry’s overall volume decrease of 1.4% yoy in February 2025.
Bernstein’s analysis highlighted that while the average Manufacturer’s Suggested Retail Price (MSRP) across the sector declined by 1.4% month-over-month, GM managed to slightly lower its net price, which was partially mitigated by a reduction in incentive spend, now at 5.3%. Additionally, GM slightly raised its production outlook for February 2025, signaling confidence in its model cycle’s ability to navigate potential challenges in the Battery Electric Vehicle (BEV) market in the U.S.
In contrast, Ford (NYSE:F) faced challenges with wholesale volumes declining 8% yoy (excluding Brazil and China), prompting the company to deepen production cuts for the second half of the year. Despite making progress in reducing inventories, concerns remain about Ford’s ability to rebound from a break-even first quarter of 2025.
Stellantis (NYSE:STLA) also faced difficulties, with retail sales dropping 16% yoy in February (excluding China and Brazil). This marks the 13th month in the past 14 with negative yoy sales change for Stellantis. The company saw a net price increase in the U.S., reflecting a hesitancy to offer dealer incentives to boost volumes.
Rivian (NASDAQ:RIVN) confronted demand challenges as well, with retail sales down 9% yoy in February. Although management cited the LA fires as a contributing factor to demand weakness, increased incentive spending suggests underlying issues with sales momentum. The company’s financial metrics from InvestingPro reveal concerning trends, including a gross profit margin of -24.14% and year-to-date stock return of -18.87%. Despite holding a strong current ratio of 4.7, indicating solid short-term liquidity, Rivian faces significant profitability challenges with its $4.97 billion in revenue. According to InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.
The report also addressed the broader implications of U.S. trade policy on the automotive sector. President Donald Trump’s decision to delay the implementation of 25% tariffs on automotive imports from Canada and Mexico for one month for compliant automakers under the USMCA, coupled with the potential for reciprocal tariffs on other nations starting April 2nd, adds to the industry’s uncertainty. This policy environment is expected to deter investors and stall critical decision-making and investments within the U.S. auto market. For deeper insights into how these developments affect automotive stocks, InvestingPro offers comprehensive research reports on over 1,400 US stocks, including detailed analysis of market trends, company fundamentals, and expert projections.
In other recent news, Rivian Automotive Inc. announced the appointment of Sreela Venkataratnam as its new Chief Accounting Officer. Venkataratnam, who previously held a senior finance role at Tesla (NASDAQ:TSLA), will oversee Rivian’s accounting operations as the company enters a new phase with its upcoming R2 vehicle launch. Stifel analysts have maintained a Buy rating on Rivian, highlighting the company’s positive gross profit achievements and the anticipated support from Volkswagen (ETR:VOWG_p) and a Department of Energy loan. Guggenheim Securities also maintains a Buy rating but has reduced Rivian’s price target from $18 to $16, noting mixed fourth-quarter results and conservative guidance for 2025.
DA Davidson raised Rivian’s stock price target to $13, maintaining a Neutral rating, and pointed out the company’s strategic marketing efforts ahead of the R2 launch. Meanwhile, BofA Securities downgraded Rivian’s stock from Neutral to Underperform, lowering the price target to $10 due to concerns over future performance and market conditions. The downgrade reflects a cautious outlook on Rivian’s earnings predictions and potential policy shifts affecting EV incentives. Despite these varied analyst perspectives, Rivian continues to focus on expanding its product lineup and exploring new revenue streams.
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