Barclays downgraded the U.S. auto and mobility sector from “neutral” to “negative” on Tuesday, sending several auto stocks lower in premarket trading. The downgrade stems from President Donald Trump’s ongoing tariff policy, which Barclays warns will weigh heavily on automaker earnings and discourage future investments. While some tariffs have been paused or selectively exempted, levies on auto, steel, and aluminum remain firmly in place.
Barclays‘ is one of the most prominent global investment banks, and its stock ratings often serve as a benchmark for sector performance. A change in its outlook can significantly impact investor sentiment and market behavior.
“Amid a highly challenging environment, making a near-term investment case for the autos sector is increasingly difficult,” Barclays analyst Dan Levy stated. He also noted that auto tariffs are “seemingly here to stay,” and valuations fail to account for the full extent of tariff risk.
As part of the broader downgrade, Barclay revised its rating for General Motors (GM) from “overweight” to “equal weight.” In Barclay’s rating system, an overweight designation means the stock is expected to outperform its industry peers over the next 12 months, while an “equal weight” rating suggests it will perform in line with the industry average.
GM’s downgrade was attributed to the fact that roughly half of GM’s vehicles that are sold in the United States are assembled abroad. The automaker’s stock dropped in premarket trading, falling from $70 to $40.
The brokerage showed modest preference towards Ford, which assembles more vehicles within the U.S. This domestic assembly could offer more protection against the rising costs tied to tariffs. As a result, Ford’s stock experienced a smaller decline, dropping from $10 to $8.
Barclays also downgraded several auto tech suppliers: Aptiv, Mobileeye Global (MBLY), and Visteon Corp. The firm anticipates automakers facing tighter budgets and rising production costs will likely delay integrating advanced technology features in upcoming models.
Barclay’s decision to downgrade ratings in the U.S. auto and mobility sectors follows a similar move by Goldman Sachs, which recently cut its annual U.S. auto sales forecast by nearly 1 million units. Together, the revisions reflect a broader sense of caution and concern on Wall Street as investors grow more concerned about the long-term impact on the U.S. automotive industry’s performance.
