As consumer spending and pricing power decrease, the automotive industry continues to struggle. In another blow to the sector, UBS Group AG (NYSE:F).
What Happened: UBS analysts said they are concerned the companies will fail to meet expectations, as consumers are becoming less likely to purchase a car.
Due to inflation and a struggling supply chain, it has become increasingly difficult and costly for one to buy a car, leaving consumers hesitant to purchase.
Many consumers believe that it makes more sense to hold off on a purchase in hopes that prices will decrease in the coming months.
A recent spike in gasoline prices due to the Russia-Ukraine conflict is making consumers more likely to buy a electric vehicle from companies such as Tesla Inc (NASDAQ:TSLA), at the expense of traditional internal combustion vehicles.
With all of these factors in mind, UBS analysts adjusted their 2023-24 outlooks for Ford and General Motors.
The bank reduced its EPS predictions for GM from $77 to $56. In addition, UBS cut its Ford EPS prediction from $20.50 to $13, according to Investing.com.
How This News Impacts Investors: As expected, this news drove Ford and GM’s stock down Wednesday.
Ford shares are down 2% to $10.98 in afternoon trading as it nears its previous 52-week low of $10.61, according to Benzinga Pro.
GM stock is down 3.57% at $31.22, nearing its previous 52-week low of $30.33, according to Benzinga Pro.
Also Read: Why General Motors Stock Is Sliding
GM CEO Mary Barra. Benzinga file photo by Dustin Blitchok.