- Shares of General Motors and Ford Motor each tumbled Monday.
- A pair of UBS downgrades cited expectations for weakening demand amid inflationary pressures.
- Shares of both GM and Ford are off about 45% year to date.
Ford's stock was down by more than 8% during intraday trading before closing at $11.37 per share, a decline of 6.9%. GM was off by as much as 7.5% before closing at $32.29 per share, down by 4%.
Both GM and Ford shares are off about 45% year to date. Both companies have a market capitalization of just under $50 billion.
UBS analyst Patrick Hummel wrote in notes to investors Monday that he expects the U.S. automotive industry to be challenging for the foreseeable future following record profit amid low supplies and high demand during the coronavirus pandemic.
He predicted "it will take three to six months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented" pricing power and profit margins for the automakers.
The investment firm downgraded Ford to "sell" from "neutral" and GM to "neutral" from "buy."
UBS continues to prefer GM over Ford due to its momentum with electric vehicles and fewer problems with production during the third quarter. Hummel said UBS expects a "solid quarter" for GM, which is scheduled to report third-quarter results on Oct. 25.
Ford last month said parts shortages have affected roughly 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs that haven't been able to reach dealers. Ford also said at the time that it expects to book an extra $1 billion in unexpected supplier costs during the third quarter.
Ford is scheduled to report third-quarter results on Oct. 26.
— CNBC's Michael Bloom contributed to this report.