JPMorgan downgrades Openlane with tariffs ‘unequivocally negative’

JPMorgan analyst Rajat Gupta downgraded Openlane (KAR) to Neutral from Overweight with a price target of $20, down from $23. The implementation of 25% tariffs on all imported automobiles, in addition to imported parts over time, is “unequivocally negative” for the auto retail ecosystem in the near- and medium-term, the analyst tells investors in a research note. The firm says 50% of vehicles sold in the U.S. are imported. Assuming these costs are passed on the consumers, it is likely to result in $4,000-$5,300, or a 9%-12%, average increase in prices, contends JPMorgan. It downgraded Openlane to Neutral, arguing that despite strong secular trends in U.S. door-to-door recently, the off-lease recovery cycle will be potentially pushed out, coupled with likely pressure on the company’s AFC finance business.