What are tariffs and how do they affect the automotive industry?

Tariffs are taxes imposed on imported goods. In the automotive industry, tariffs can significantly increase the cost of vehicles or parts crossing borders. When tariffs are imposed between countries like the U.S. and Canada, manufacturers sometimes halt production of certain models because the added costs make them unprofitable. This creates market opportunities for competitors who can produce similar vehicles without facing the same tariff barriers.

What is the difference between automakers and parts suppliers in this investment theme?

This theme includes two main types of companies: automakers (OEMs) like Toyota, Honda, and Ford who manufacture complete vehicles, and parts suppliers like Magna International and Visteon who make components used in those vehicles. The automakers can directly capture Nissan's abandoned market share by selling more of their competing models, while the parts suppliers benefit indirectly as these automakers increase production and require more components.

What are aftermarket parts companies and why are they included?

Aftermarket parts companies like Genuine Parts Company and Dorman Products make replacement components for vehicles already on the road. They're included in this theme because as the mix of popular vehicles on Canadian roads shifts away from Nissan models toward competitors, there will be a long-term opportunity to supply replacement parts for these newly dominant vehicle models as they age and require maintenance.

What does "tariff-exempt production facilities" mean?

These are manufacturing plants that can produce vehicles without incurring tariffs when selling to a particular market. For example, automakers with plants located in Canada can supply the Canadian market without paying import tariffs. Similarly, due to trade agreements like USMCA (formerly NAFTA), production facilities in Mexico may also avoid certain tariffs when exporting to Canada. This gives these manufacturers a significant advantage when tariff disputes arise.

What is "Projected Profit" in the stock data?

Projected Profit refers to analysts' forecasts of a company's future earnings. This metric helps investors understand how profitable a company is expected to be in upcoming quarters or years. For the companies in this theme, projected profits may increase if they successfully capture market share from Nissan in Canada, potentially leading to higher stock prices.

16 handpicked stocks

Canada's Automotive Opportunity

This carefully selected group of stocks represents companies poised to benefit from Nissan's production halt in Canada. Our professional analysts have identified automakers and parts suppliers strategically positioned to fill the market gap and capture abandoned market share during this unique industry disruption.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 11