Citi has initiated coverage on Group 1 Automotive (GPI, Financial) with a Buy rating, setting a price target of $463. Analyst Michael Ward has commenced this coverage as part of a broader look at the auto manufacturers and auto parts sectors. Despite the ongoing uncertainty driven by tariff disputes, which is expected to cause fluctuations in U.S. light vehicle sales, recent sales data for March and April have shown stronger-than-anticipated performance.
The firm anticipates that once the tariff situation stabilizes, demographic trends will support an annual demand of 16 to 18 million car units in the U.S., approximately 10% above the projected 2024 figures. This anticipated increase will necessitate a replenishment of inventories, presenting a favorable opportunity for production growth within the auto sector.
Citi maintains that auto dealers are well-positioned to handle the current uncertainties, forecasting that these conditions will eventually lead to a positive financial outlook for the industry. The ongoing momentum in showrooms further underscores this optimistic view.
