GM and Ford shares tumble after UBS downgrades on expectations for weakening demand

DETROIT – UBS connected Monday downgraded shares of General Motors and Ford Motor connected expectations for weakening request amid inflationary pressures, sending the stocks tumbling to statesman the week.

UBS downgraded Ford to "sell" from "neutral" and GM to "neutral" from "buy." Ford's banal was down by astir 8% during trading Monday morning, portion GM shares were disconnected by astir 7%.

Analyst Patrick Hummel expects the U.S. automotive manufacture to beryllium challenging for the foreseeable aboriginal pursuing record profits amid debased supplies and precocious request during the coronavirus pandemic.

Hummel, successful notes to investors Monday, predicted "it volition instrumentality three-to-six months for the car manufacture to extremity up successful oversupply, which volition enactment an abrupt extremity to a 3-year signifier of unprecedented" pricing powerfulness and nett margins for the automakers.

He wrote that his outlook for the wide assemblage successful 2023 "is deteriorating accelerated truthful that demand demolition seems inevitable astatine a clip erstwhile proviso is improving."

UBS continues to similar GM implicit Ford owed to its momentum with electrical vehicles and little problems with accumulation during the 3rd quarter. Hummel said UBS expects a "solid quarter" for GM, which is scheduled to study third-quarter results connected Oct. 25.

Ford past period said parts shortages person affected astir 40,000 to 45,000 vehicles, chiefly high-margin trucks and SUVs, that haven't been capable to scope dealers. Ford besides said astatine the clip that it expects to book an other $1 billion successful unexpected supplier costs during the 3rd quarter.

Ford is scheduled to study third-quarter results connected Oct. 26.

— CNBC's Michael Bloom contributed to this report.