GM, Ford shares fall after UBS downgrades cite weakened demand

General Motors’ world headquarters can be seen in Detroit’s Renaissance Center.

Paul Hennessy | LightRocket | Getty Images

DETROIT — Stocks of General Motors and Ford Motor every tumbled Monday after a couple of UBS downgrades citing expectations of a weakening of demand amid inflationary pressures.

Ford’s stock fell more than 8% in intraday trading before closing at $11.37 a share. share, down 6.9%. GM fell as much as 7.5% before closing at $32.29 a share, down 4%.

Both GM and Ford shares are down about 45% year to date. Both companies have a market value of just under DKK 50 billion.

UBS analyst Patrick Hummel wrote in notes to investors on Monday that he expects the US auto industry to be challenging in the foreseeable future after record profits due to low supplies and high demand during the coronavirus pandemic.

He predicted that “it will take three to six months for the auto industry to end up in oversupply, bringing an abrupt end to a 3-year phase of unprecedented” pricing power and profit margins for automakers.

The investment company downgraded Ford to “sell” from “neutral” and GM to “neutral” from “buy”.

UBS continues to favor GM over Ford because of its momentum with electric vehicles and fewer problems with production in the third quarter. Hummel said UBS expects a “solid quarter” for GM, which is scheduled to report third-quarter results on Oct. 25.

Ford said last month that parts shortages have affected about 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs, that have been unable to reach dealers. Ford also said at the time that it expects that book an extra $1 billion in unexpected supplier costs in the third quarter.

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

– CNBCs Michael Bloom contributed to this report.

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