Automakers handle tariff 'punches' pretty well: Portfolio mgr.

With the end of 2025 now in sight, how is the auto industry looking back in the rearview on this past year's EV pricing trends, supply chain mitigations, and the tariff-related costs major producers have had to take on?

Gabelli Funds Portfolio Manager Brian Sponheimer comes on Market Domination to talk about some of the above themes and how Ford (F), General Motors (GM), and Tesla (TSLA) have been adapting to these circumstances.

To watch more expert insights and analysis on the latest market action, check out more Market Domination.

Video Transcript

00:00 Speaker A

The auto sector is at a crossroads. Tariffs, pricing pressure, and a sharp pullback in EV ambitions are reshaping how Wall Street is looking at the space. For now have get a play the auto sector with the Yahoo Finance playbook. And joining me now, we've got Brian Sponheimer, Portfolio Manager at Gabelli Funds.

00:20 Speaker A

Brian, it is good to see you. So, maybe start on high level, Brian, we're coming out of earning season, a lot a lot of big trends and themes to talk about. One, of course, would be with tariffs. And maybe we'll start there because you know Brian how automakers have largely, you say, been able to absorb tariff impact. How have they been able to do that, Brian? How have they been navigating that dynamic? And and do you see that continuing, Brian? How sustainable is that?

00:47 Brian Sponheimer

Yeah, thank you for having me on. I I I think it was really interesting coming out of earning season to see uh the automakers largely speaking be able to uh say to investors that yes, we've been through this this first round of um, of tariff hits really starting in the second quarter and going into the the third where um, through supply chain mitigation along with streamlining that's been taking place over the course of the last decade, uh they were really able to uh absorb costs and not push those prices on the consumers. Now, as we're looking towards the uh the back end of the year, where for vehicles that are made in the USA, you're going to get the added benefit of getting the MSRP rebate for what was actually built here. And I think that you're going to see the automakers continue to talk about their ability to be resilient, their ability to handle really anything that comes their way. This is an industry that uh has has really never been without some sort of um, complication, um, on a yearly basis. So they're able to handle the um, the punches that that come their way pretty well.

02:00 Speaker A

Who is, Brian, who's better relatively better positioned to navigate that tariff dynamic between Ford and GM?

02:11 Brian Sponheimer

You know, that's a really good question. I think they're both fairly uh well positioned. Ford clearly uh has more of their production in the United States. I think when you look at um their product portfolio, uh it really lends itself to being uh best suited to to handle this really well. On on the other hand, they're dealing with uh the Novellus fire that's going to bite into uh fourth quarter production for uh for the F-150. So they've got some near-term headwinds as it relates to some of their their production uh efforts, but uh I I think both are are fairly well situated um certainly relative to peers.

02:50 Speaker A

Brian, let's talk about that EV trend as well. You talk about how automakers pulling back plans, you know, to electrify their portfolios. Why is that happening, Brian, and do you see that continuing as a trend and theme here in the US?

03:14 Brian Sponheimer

Yeah, I think in the US the consumer just um we we we saw early adoption on uh with Tesla and I think those that largely wanted to buy an electric vehicle um did so. And now we're coming on second generation buyers of those vehicles and and you're just not seeing that um that real lift up in the marketplace. And I think what's going to be really interesting as we get into the fourth quarter here is to find out really what the natural appetite for these vehicles is without the $7,500 federal tax uh uh credit that um that consumers would get. And so, you know, we'll see what happens in November here, but we also we already saw in October where EV sales as a percentage of the total sales in the US um really fell backwards in a in a material way. Uh I would likely see that that the ramp for EVs is is going to happen. It's just going to take quite a long time and we're seeing that reflected in some of the the CAPEX plans by by the automakers.

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