Tariffs Cut North American Light Vehicle Production Forecast: S&P

Recent US tariffs have significantly impacted the outlook for global light vehicle sales and production, resulting in broad downgrades in forecasts for various regions, reports S&P Global. The risk management agency downgraded North American production to its lowest levels since the COVID-19 pandemic. 

S&P Global notes reductions in automobile tariffs are anticipated in early 2026 for Canada and Mexico, and in early 2027 for other countries. Meanwhile, the most pronounced downward revisions in production forecasts are seen for 2026, following performance in many markets through 1Q25.

The overall impact of these tariff actions is concentrated in North America. The region’s light vehicle production outlook was reduced by 944,000 units for 2025 and 778,000 units for 2026. The forecast reflects significant adjustments since the COVID-19 pandemic, primarily driven by the implications of direct tariffs and declining demand. Inventory levels are expected to decrease as consumers move to purchase vehicles priced before the tariff changes. The production forecast for 2027 in North America remains flat at 15.47 million units, indicating a potential for onshoring benefits for manufacturers such as Nissan, BMW, and Honda.

As for South America, the light vehicle production outlook was also reduced by 28,000 units for 2025 and 34,000 units for 2026. While the direct impact from tariffs is limited in this region, the broader supply chain implications and anticipated reductions in demand have influenced these forecasts, notes S&P Global. Brazil is expected to be less affected by these changes compared to Argentina, where local production dynamics face more constraints.