Detroit automakers had a really bad day Wednesday as investors hammered Ford, General Motors and Fiat Chrysler after all three scaled back their 2018 earnings forecasts due largely to rising prices for raw materials.
General Motors, the largest U.S. automaker, suffered its worst intraday drop in years, falling more than 8 percent Wednesday despite beating Wall Street estimates. Rival Fiat Chrysler plunged 16 percent Wednesday after missing earnings estimates, announcing the sudden death of CEO Sergio Marchionne and reducing earnings guidance for the year. Shares of Ford, which announced earnings after the markets closed, were under pressure all day.
All three are again trading down Thursday with Ford falling under $10 a share for the first time since 2012.
GM said a higher-than expected jump in commodity costs and unfavorable exchange rates in Brazil and Argentina will cost it an extra $1 billion this year. Ford’s second-quarter earnings plunged by almost 50 percent and the company lowered its 2018 earnings projections.
Ford’s Chief Financial Officer Bob Shanks said its commodity costs during the quarter were about $300 million higher from last year, attributing about half of that to the U.S. tariffs on steel and aluminum. The tariffs are expected to eat up about $600 million in profit this year, he said.