Goldman cuts ratings on auto suppliers amid tariff, demand risks

Investing.com -- Goldman Sachs downgraded several U.S. auto suppliers citing rising tariff costs and weakening consumer demand, while also cutting its U.S. auto sales and global production forecasts.

The bank lowered its ratings on Lear (NYSE: LEA) Corp and Visteon (NASDAQ: VC) to Neutral from Buy, warning that tier 1 suppliers are unlikely to fully offset volume declines caused by trade pressures and a softer macro environment.

Visteon and Lear have the highest tariff exposure as a percentage of EBIT, analysts wrote, calling it a downside risk.

At the same time, Goldman upgraded BorgWarner (NYSE: BWA) and Sensata Technologies to Buy from Neutral, noting stronger exposure to hybrids and lower import cost risks.

“We upgrade Sensata Technologies to Buy from Neutral post the sharp sell-off, ST is down 24% YTD vs. the S&P 500 down 7%, to reflect a trough valuation,” analyst said.

BorgWarner benefits from a longer tail for ICE and hybrid content, and Sensata’s sell-off offers an attractive entry point, the note said.

The bank now expects U.S. auto sales to fall to 15.40 million units in 2025 and 15.25 million in 2026, down from 16.25 million and 16.35 million previously.

Global production estimates were also lowered to 88.7 million and 90.7 million units, reflecting tariff headwinds and a slower EV transition in the U.S.

Goldman estimates new tariffs will lift vehicle costs in the U.S. by $2,000–$4,000, with automakers struggling to fully pass on the increase.

Despite some companies offering incentives, the firm warned pricing power is limited in a weakening demand environment.

The analysts continue to prefer industrial tech stocks over autos, citing stronger business models and more favorable cyclical dynamics.

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