S&P downgrades Stellantis rating, expects tariff headwinds

(Reuters) - Global ratings agency S&P Global said on Thursday it has downgraded Stellantis to "BBB" from "BBB+", citing weak margin prospects.

S&P said it expects the price cuts implemented in North America and Europe late last year coupled with affordability concerns from buyers to limit the automaker's volume growth and margin expansion in those markets.

U.S. President Donald Trump on Wednesday gave carmakers a one-month reprieve from his punishing 25% tariffs on Canada and Mexico.

Stellantis thanked Trump for the tariff pause, and pledged to help the president's America First aim of building more cars in the United States.

The agency in its report added that it does not expect Stellantis to absorb the cost of tariffs and expects the company to pass on the impact using pricing and possibly shifting some assembly to the U.S.

The S&P downgrade comes a week after the Franco-Italian-U.S. automaker gave a cautious outlook for 2025. The company's annual results took a hit from a slump last year in its U.S. business, that led to the ousting of Carlos Tavares as CEO.

(Reporting by Anshuman Tripathy in Bengaluru; Editing by Shailesh Kuber)

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