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Automakers end March on a high note amidst looming tariff headwinds

For the automobile industry, March was an eventful month that witnessed a series of developments ranging from new product launches to controversies involving autonomous vehicles. Latest statistics reveal that the uptrend in general economic activity and promotional initiatives bode well for the sector.

Investors are responding positively to the upbeat trend, and as a result shares of all leading automobile manufacturers are trading higher.

Data made available by General Motors (GM), which has discontinued publishing monthly sales reports, showed new vehicle sales climbed 16% year-over-year to 296,341 units in March, marking a recovery from the weakness witnessed in February. The broad-based growth reflects the rebates offered by the company on its models, particularly in the SUV and pickup sections.

Justifying its decision to do away with monthly reports and to release sales numbers on a quarterly basis, GM said it is difficult to factor in the short-term fluctuations and assess the sales performance for 30-day periods.

Sales of Fiat Chrysler Automobiles (FCA) advanced 14% to a record high of 216,063 vehicles during the month, driven mainly by the robust performance by the Jeep models.

The uptrend in general economic activity and promotional initiatives bode well for the sector

Among the top automakers, Ford Motor Company (F) fell short of registering double-digit sales growth. While the latest SUV model accounted for most of the increase, a decline in car sales restricted the company’s overall sales growth to 3.4%.

While the aggressive measures adopted by Tesla (TSLA) chief Elon Musk to meet the production target for the Model 3 sedan failed to bear fruit, the Silicon Valley-based company said it manufactured 34,494 vehicles in the first three months of 2018, the highest number for any quarter.

Meanwhile, analysts are of the view that the growth momentum will slow down during the remainder of the year, especially in summer, owing to the recent increase in interest rates.

The recently imposed tariff on steel imports continues to be a cause of concern for the auto sector, prompting companies to explore new strategies to maintain sustainability. To make matters worse, the Trump administration is mulling tightening of the ‘rule of origin.’

It is against this backdrop that leading players in the industry are taking steps to revise their product portfolio by including new variants of the popular models.

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