JP Morgan on GM: Chinese Tariffs Not Likely to Impact Profits

JP Morgan has published a research report on General Motors (NYSE: GM) commenting on reports that have suggested China's imposition of tariffs on GM products in China.

In the report, JP Morgan writes, "Media reports today suggest that China is imposing an anti-dumping duty of 8.9% and an anti-subsidy duty of 12.9% on GM's imported vehicles into the country. Although we are still reviewing the data, on US-made cars our initial sense is that it will have a modest impact on General Motors – by far, the US automaker with the highest presence in China. In 2010, GM sold 2.43MM vehicles in China, of which 31.7K (i.e., 1.3%) were imported from outside China, according to J.D. Power. Most of GM's imported vehicles are low-volume vehicles in China (half of the import volume is accounted for by Buick Enclave and Cadillac SRX). J.D. Power expects GM's import-to-sales ratio in China to climb slightly to 1.6% in 2011. Ultimately, GM's plans would be to localize production of many currently imported cars in China anyway, but the new trade tariffs may accelerate GM's localization plans."

JP Morgan maintains its Overweight rating on General Motors, which is currently trading down $0.21 from yesterday's $20.11 closing price.