[Source/Observer Network, Pan Yuchun; Editor/Gao Shen] According to a report by the Financial Times of the UK on April 8, due to US President Trump's abuse of tariffs, investors have been forced to abandon bonds in Europe's automotive industry, causing a sharp increase in the cost of debt default insurance for the industry and making it the largest victim of the European debt market.

Aston Martin is compelled to sell shares in its racing team.

Gianmarco Migliavacca, senior credit analyst at Neuberger Berman, stated that the tariff will harm the vast majority of automakers.

For instance, Aston Martin, a luxury brand, saw the price of its bonds issued last year fall to an all-time low on April 4. One of its bonds fell more than 9% since April 4 and continued to decline on April 8. Aston Martin currently operates with bonds worth £1.16 billion (approximately RMB 10.93 billion) at interest rates in the double digits, while investors demand substantial compensation to continue holding its bonds.

However, under Trump's tariff strikes, Aston Martin, which was already incurring losses, faces even greater challenges. As the US market accounts for 37% of Aston Martin's annual revenue but the company does not produce cars in the US. Sources familiar with the matter said that Aston Martin's gross profit is expected to be impacted by up to £30 million (approximately RMB 283 million).

To raise funds, Aston Martin recently announced plans to sell a minority stake in its F1 racing team and raise over £125 million (approximately RMB 1.178 billion) through additional investments from group chairman Lawrence Stroll.

Aston Martin Racing participates in the 2025 F1 Japanese Grand Prix Visual China

In the credit default swap (CDS) market, from April 4 to 7, the cost of insuring against the default of Volkswagen's bonds over the next five years rose by 30 basis points to reach 154 basis points, the highest level since the outbreak of the COVID-19 pandemic.

Sources familiar with the matter said that some Volkswagen-branded vehicles are imported from Europe to the US for sale, while its luxury brands Audi and Porsche are produced outside the US.

Volkswagen dealerships in the US Visual China

In addition, since early April, the five-year CDS prices of Stellantis also increased by 40 basis points, rising from 170 basis points to around 210 basis points.

Migliavacca said that for foreign carmakers like Volkswagen, their profits in the Chinese market are decreasing, and the survival environment is becoming increasingly difficult. Multinational automakers originally hoped to offset losses through the US market, but Trump's tariffs have also severely impacted this part of the profit.

The risks for parts suppliers are even greater.

In addition, as the US will further impose a 25% tariff on imported auto parts starting May 3, the broader European automotive supply chain has also been subject to investor pessimism and selling off. For example, Faurecia, which supplies parts to Stellantis, Tesla, and BYD, had anticipated as early as March that the industry would face a "significant" impact from Trump's tariffs. "Allocating 25% of funds for procurement across the entire industry will have a very significant impact," said Olivier Durand, CFO of Faurecia.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7491499131765015081/

Disclaimer: The views expressed in this article are solely those of the author. Feel free to express your opinion by clicking the "Like/Dislike" buttons below.