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European auto shares hit by retaliation fears after EU tariffs on Chinese EVs

Published 06/12/2024, 06:31 AM
Updated 06/12/2024, 07:30 AM
© Reuters. FILE PHOTO: A longtime exposure shows cars driving on the Mittlerer Ring  in Munich, Germany, February 1, 2023. REUTERS/Lukas Barth/File Photo

By Tristan Veyet

(Reuters) -Shares in some of Europe's biggest automakers dropped on Wednesday on fears of Chinese retaliation after the European Commission said it would impose duties on imported Chinese electric vehicles.

The Commission said it would apply provisional duties of up to 38.1% on the Chinese imports - a move European manufacturers have long warned against, fearing it could impact their sales in China, the world's biggest auto market.

"The tariffs have turned out to be lower than many feared and are initially a plan that can still be revised. The measures are a disaster for European car buyers and for German car manufacturers," said Frank Schwope, automotive industry lecturer at the University of Applied Sciences FHM Hannover.

"China is by far the most important sales market for all German car manufacturers. However, French car manufacturers, for whom China is an insignificant market, would benefit from measures against Chinese imports to Europe," Schwope added.

The STOXX carmakers index was last down 0.4%, having earlier fallen as much as 1.6%.

Volkswagen (ETR:VOWG_p) and BMW (ETR:BMWG), down around 1-1.8%, were among the worst performers on Germany's blue-chip index. Luxury German manufacturer Porsche Holding was down over 7% as it traded ex-dividend.

However, shares in French group Renault (EPA:RENA) and Franco-Italian-American group Stellantis (NYSE:STLA) turned positive in mid-session trade.

Jefferies analyst Philippe Houchois said German carmakers were getting hit by the "fear of retaliation".

Adding to the pressure was news of possible lawsuits in Britain over allegations of emissions test cheating that could cost companies over $7.5 billion.

© Reuters. FILE PHOTO: A longtime exposure shows cars driving on the Mittlerer Ring  in Munich, Germany, February 1, 2023. REUTERS/Lukas Barth/File Photo

On Tuesday, spokespeople for Mercedes Benz (ETR:MBGn) and U.S. carmaker Ford (NYSE:F) said they saw "no merit" in the claims.

($1 = 0.7848 pounds)

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