Automobile companies are preparing for an even larger shock for the global supply chain of the automotive automotive than the Covid pandemic, since the duration and the extent of Donald Trump’s global tariff war are unsafe.
Just two days after the US President issued an executive regulation that applied for 25 percent for all imports from Canada and Mexico and 10 percent for goods imported from China, Trump put taxes for Mexican imports on hold after a month “” Very friendly “conversation with Mexican President Claudia Sheinbaum. Shortly afterwards, the Canadian Prime Minister Justin Trudeau also concluded a contract with the United States for a 30-day break for tariffs.
Car manufacturers were careful about tariffs.
“When you start overreacting, it is a bit dangerous now,” said Michael Lohscheller, Managing Director of Polestar, the electric car manufacturer supported by China’s Geely, recently in an interview.
What could the worst case scenario be?
Many drivers had turned to Trump’s first presidency to play the risk of an international tariff war, and said that the US President had not carried out the threats of additional taxes against his trading partners.
According to the supply chain expert, the worst-case scenario, in which both the USA and the retaliation duties are implemented, would probably lead to an insolvency chain for weaker suppliers of auto parts.
The Global Automotive Supply Chain is so complex and interconnected that a component made in Mexico could end in an American work before returning to the final assembly in Mexico and then selling to the US market what is “tariff-on tariff “Situation.
“The mechanics are almost as bad, although not worse than the actual amounts, since the requirements for accounting and accounting and paperwork are massive to ensure compliance,” said Ian Henry, an expert in automotive production that operates auto analysis advice.
Henry warned that the disorder of the supply chain could be worse than during the pandemic if a tariff war lasted and the car manufacturers could not provide enough financial support to keep their suppliers alive.
Mikael Bratt, Managing Director of the Swedish seat belt and airbag manufacturer autoliv, said that it would start with the discussions to pass on the costs of higher tariffs to customers if they were implemented against Mexico.
“There is no reason at all why we. . . Subscribe all costs like this, ”said Bratt last week during a winning information. “Ultimately, there will be higher costs for vehicles sold in the USA.”
Which automobile manufacturers are the most exposed?
The traditional “Big Three” aging, which have distributed their footprint on the entire continent since the signing of the North American Free Trade Agreement in 1994, are most susceptible to profit. GM was the most exposed analyst, according to the Chrysler owner Stellantis was not much better off. Ford is least exposed because it imports the smallest proportion of vehicles outside the USA.
GM makes its popular high-margin chevrolet Silverado in his Silao plant in Mexico and Oshawa in Canada, which increases its exposure. The BNP-Paribas analyst James Picariello said that the car manufacturer probably could move the production to the USA for around 300,000 of the 350,000 trucks that it is currently importing, but would take such a switch for 12 to 18 months, since the supplier deliveries and the Employees were hired.
That would add about 1 billion USD to labor costs, he said, since the workers in the United States earned more than in Mexico. The operational income of GM would take a hit of 7 percent, but this looked favorable compared to a possible reduction of 50 percent, which was due to a tariff of 25 percent.
“A billion dollar -counter -wind seems to be a manageable scenario at the moment,” said Picariello.
Investors and analysts assumed that a tariff for goods from Canada and Mexico would finally be negotiated, he added, otherwise “the numbers would otherwise become too large so that the industry would survive properly”.
Are German car manufacturers spared unless tariffs are imposed against the EU?
European car manufacturers are being exposed to the EU. Volkswagen is in the worst position. 45 percent of its US sales come from cars in Mexico and Canada, although the American market is a small share of the group’s total turnover.
Moody estimates that a Mexican tariff of 25 percent of the Global Earnings of the Volkswagen Group before interest and taxes by more than 15 percent estimates that all vehicles made of luxury audi and Porsche brands sold outside the country, which were manufactured outside the country. becomes.
“We have a factory in Mexico and, regardless of which the administration works, our plan is to become stronger in the United States,” said Gernot Döllner last month. But he added: “We believe that tariffs are wrong and believe in free trade.”
The German car manufacturer BMW is less exposed because 65 percent of its cars are built in the United States on site, while it is also a net exporter from the USA.
“There may be volatile situations that could be less predictable, but I’m really optimistic,” said Jochen Goller, board member of BMW, who is responsible for customers, brands and sales. “I think it will be one of the growth markets for us next year.”
Will Tesla appear as a winner from Trump’s tariffs?
Investors have found that Elon Musk’s close relationships with Trump Tesla will protect against the effects of the president’s guidelines, but the world’s largest electric vehicle manufacturer is still exposed.
Tesla assembles all vehicles sold in the USA, according to Barclays, contains 20 to 25 percent of its components for model 3, model Y and cybertruck from Mexico.
“Over the years we have tried to localize our supply chain in every market, but we are still very dependent on parts from all over the world for all of our companies” of a hit of its profitability of Trump’s tariffs.
The company could also be a goal of retaliation tariffs through Canada. Former finance minister Chystia Freeland, who replaces Trudeau as Prime Minister, said Ottawa should reciprocate against US -Zölle by adding Tesla vehicles to punish musk with huge taxes.
The tariff war also comes when Tesla is asserted due to the slowdown of the demand for electric vehicles, increased competition and a counter -reaction against Musk against Musk’s political activism with declining sales in Europe.
According to La Plate deform automobile from the French Industrial Association, Tesla’s turnover in France was 63 percent lower than a year earlier.
Which career are least exposed?
Smaller Japanese car manufacturers such as Mitsubishi Motors and Subaru could benefit from a lack of production in Mexico and Canada. Honda is also comparatively well placed, since two thirds of the US sales are compiled on site, according to Barclays.
Takao Kato, Managing Director of Mitsubishi Motors, told reporters on Monday that the tariffs would hardly have an impact on the company and that it could even get a slight “tailwind” of increased exports to the USA if the tariffs were not on the rest of Asia would be extended.
Afterwards, however, he withdrew his comment and said that “it looks like there is more a headwind”, and made it clear that Japan could benefit from the finish line from the finish line.
It is also unlikely that Renault will be hit hard because it has no sales in the USA or Canada. The shares of the French automobile manufacturer decreased by only 0.6 percent on Monday, far below the waterfalls, which were suffered by other European car manufacturers with larger exposure in the USA.
Renault, one of the few European brands that did not award a profit warning last year, was “very good in Europe,” said Stephen Reitman, analyst at Bernstein. The company’s commitment to tariffs takes place through his participation to Nissan, who is currently pursuing a merger with Honda.
But while the company is less exposed than competitors, Reitman added: “There are not many winners in all of this. . . It reduces prosperity, reducing GDP, which reduces car sales. “
