Analysts at multinational investment bank and financial services company Morgan Stanley have announced stock downgrades for several U.S. automakers, including General Motors. GM stock value was downgraded from “equal weight” to “underweight,” while the GM stock price target was reduced from $47 per share to $42 per share. As a result, GM stock value declined sharply, falling 4.87 percent Wednesday to close the day at $45.73 per share.
Per a report from Reuters, which cites an investor note from Morgan Stanley analysts led by Adam Jonas, the new stock price downgrade was in response to high vehicle inventories, falling prices, and possible signs of weakening consumer demand, despite increasing market share among Japanese and South Korean automakers, as well as EV makers. Analysts also pointed to competitive pressure from Chinese automakers, with the Chinese market producing nine million more cars than it buys.
Morgan Stanley also targeted GM’s crosstown rival, Ford Motor Company, which was downgraded from “overweight” to “equal weight” with a price target drop from $16 per share to $12 per share. Ford stock closed the day with a loss of 4.10 percent, down to $10.42 per share. EV producer Rivian Automotive and Magna International were downgraded as well, both of which were given a rating of “equal weight” from a previous rating of “overweight.” Rivian was down 6.84 percent for the day, closing at $11.03 per share, while shares for Magna International dropped 5.70 percent to $40.35 per share.
Despite the sharp decline in stock value in the wake of the downgrade, GM shares are still up more than 40 percent year-over-year compared to September of 2023. Meanwhile, Ford stock value has declined more than 15 percent during the same time period.
Meanwhile, Morgan Stanley upgraded various car retailers and dealerships, citing favorable consumer and brand exposure, as well as insulation from Chinese competition and recurring profit generation via parts and vehicle servicing. The financial services company upgraded ratings for Penske Automotive, Asbury Automotive, and Sonic Automotive.
Horsepower and grip take the win.
Amid a legal battle with a GM supplier.
With multiple model years recommended.
Generally following the market trend.
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When I first read this news, I was angry. Like if we can't manage to keep our auto industry alive then we will fail as a nation to a nation with one of the lowest rankings of personal liberties. Its like despite all the headlines of Ford and GM investing into EV tech, manufacturing, and their EV sales growing (GM catching up to Ford even) Morgan Stanley has already decided they will fail no matter what (despite the Japanese being even more reluctant to move forward with EVs).
Yet on the other hand, I read the Fordauthority version of this news and it mentioned back in February MS said Ford was one of their top stock picks for the year. It wasn't any new news back then that China has now become the largest exporter of cars in the world surpassing Japan and exporting cars in the millions. Why is this all of the sudden shocking?
Also, why is there this assumption that Chinese automakers will only take shares from these two brands? People are only trading in Chevrolets and Fords for BYDs and MGs? This should affect the Japanese, Koreans, and Euro volume brands (VW specifically) just as much. Its a chunk of the same pie. Why are only these two assumed to be affected and the rest immune or not even mentioned?
Or could this be a ploy to lower the price of the stocks of these two brands to bank on a modest rise of it? I would love to hear everyones thoughts on this.
It seems to me GM, under Barra has put all their eggs in two baskets: EVs and China.
It remains to be seen how their EVs perform longer term but so far they're not meeting expectations. GM is planning an all-EV lineup and has spent lavishly on it but there has been no return on investment so far and likely won't be for many years to come. They've had three key problems. Firstly the Ultium EV cars have suffered from serious problems according to owners on the various forums and numerous prominent reports . Secondly, they've been agonizingly slow to launch, falling way behind planned on-sale dates. Lastly, demand has been wildly below expectations. For instance about 5,000 EV pickups when GM planned for 400,000 per year. So far the EV "egg" isn't delivering for the shareholders.
With regard to the other "egg" known as China, GM withdrew or scaled back on various international markets in favor of going all-in on that Asian nation. That seemed to be working for them with four million cars delivered in 2017 but now that number dwindled to just over 2 million in 2023 and is expected to go down by another 500,000 units in 2025. The company is now losing $200 million on its Chinese operations. With the Chinese now very capable of building cars on their own, thanks to years of GM and others teaching them the business, it's highly likely the days of GM selling 4 million cars in China are gone.
So where does that leave them? They still made over $12 billion last year but that's largely due to the strength of big trucks and SUV sales in America so can those products in their home market continue to deliver enough to offset the loss of China and a disappointing EV climate for them. It's a big question and I'd say Morgan Stanley was right to downgrade them.
I’ve been saying this for years that GM was being financially reckless by putting all their eggs into one basket and abandoning other markets for it (including the US with resisting offering hybrids and as an example not selling the XT5 here) but given all the downvotes I got for it nobody (but you) seemed to agree. Well those chickens are now coming home to roost. 9 million of them. So get your tax dollars ready for yet another bailout because of this dumb*** decision of theirs.
Yessir, and Barra's mis-management just raised its ugly head again with news that GM/Chevy is completely abandoning the ICE Sedan market and discontinuing their Malibu in favor of the slow-selling Bolt. Meanwhile, Honda, Toyota, Kia, Hyundai Executives are throwing a PARTY at the news.
Hey as a GM stock owner for over 12 years im used to never buy fine wine when the stock goes up 5% for no reason, because it will certainly drop next week by the same and then slide and stagnate for the next month at least
marry msrp barra should just increase the msrp and delivery fee. that will fix it!
2025 was abysmal jump. for 2026, msrp increase by 22000$ across the board for every trim and destination charge goes to 8999$. that will look great on the books! we believe in you mary msrp barra
I agree with most of the comments, I said two years ago that it was crazy to invest so heavily on an all-EV pipe dream. The time and money spent on EV’s has been detrimental to the other parts of the business, namely cars. I get that most people want trucks and crossovers right now but history shows us that can change quickly. GM should have kept one other sedan besides Cadillac for the buyers that still want them. Pick either the Impala or Malibu and offer as many trim options as possible to appeal to all market segments including economy to luxurious to sporty. Then advertise it! I still believe that market exists and it can be covered by Cadillac and Chevrolet. Get innovative and put those young engineers to work. Figure out how to get a sedan body on a Crossover platform that shares drivetrains. Then build a competitor for the Jeep Wrangler and Ford Bronco! That market is huge, where is GM??
EV's are a commodity. ICE vehicles are a commodity.
No less than everyone's star guru, Musk, has said Tesla is not worth owning without autonomous driving tech.
The same is true for GM. Without Cruise, GM makes what in the long run are low-profit commodities.
Investor Day, October 8. If GM doesn't blow the doors off of the transportation industry with AV, AV supported by AI (from Microsoft), then GM is a low profit producer of commodities.
October 8. If GM doesn't make a major announcement in the AV sector that day then Barra will lose her job, probably in early 2025, and I bet she knows this....
Autonomous driving tech beyond a fancy hands free cruise control system still requiring us to monitor the car is not going to happen within our lifetime. So get it out of your head. It would require massive and costly upgrades to infrastructure requiring the human element to be fully removed from the roads not even to cross the street and down to simple full marking of roads which our own town won't even do the residential streets. Our politicians and local mayors are too busy getting indicted for corruption and working with foreign adversaries to be interested in such expenses.
Good--- keep making car in China ---v8 engine failing --cheep interior material -- now NO sedans ---No good color exterior and interior ---pushing EV -- sales and ratings will get worse