Car companies are preparing for what might be a greater shock to the global supply chain of cars from the roaming epidemic amid uncertainty during the Donald Trump War of War.
Just two days after the US President issued an executive order that applies the 25 percent definitions to all imports from Canada and Mexico, in addition to 10 percent on the goods imported from China, Trump put fees on Mexican imports for a month after a “very friendly” conversation with the president Mexican Claudia Shinbum. Shortly later, Canadian Prime Minister Justin Trudeau also reached an eleventh deal with the United States for 30 days on the definitions.
It was cautious car makers about making major and expensive strategic changes without more clarity in the long -term direction of American trade and energy policy, although the executives of General Motors, Stelantis and Tesla have indicated that it would increase manufacturing in the United States to compensate for any impact of definitions .
“If you start with an exaggerated reaction, this is somewhat dangerous now,” said Michael Lahechiller, CEO of Polestar, the maker of the Chinese -backed electric car, in an interview with him.
What can be the worst scenario?
Many car executives have turned into a Trump's first experience in reducing the danger of an international tariff war, saying that the American president had not experienced threats from additional fees against its commercial partners.
Supply chain experts say that the worst scenario of the worst cases, which is likely to lead to both the American and revenge customs tariffs, to a series of bankruptcy between the weakest car pieces.
The global supply chain of cars is so complex and interconnected that an component made in Mexico can end up in an American factory before returning to Mexico for the final assembly and then selling it to the American market- which may lead to “a tariff on- the definition.
“Its mechanisms are very bad, if not worse than the actual amounts because the requirements of accounting and maintaining the notebooks and paper to ensure huge compliance,” said Ian Henry, a car production expert who manages automatic analysis consulting.
Henry warned that disrupting the supply chain may be worse than it was during the epidemic if it continued the war of tariffs and that car manufacturers were unable to provide adequate financial support to maintain their suppliers standing on his feet.
Michael Pratt, CEO of the Swedish Security Belt Industry and the aerobic maker, said that he will immediately start discussions to pass the cost of high definitions to customers if they are implemented against Mexico.
“There is absolutely no reason why we are.. Prat said in the earnings of last week:” I absorb any such cost. “Ultimately, it will be a higher cost for vehicles sold in the United States.”
Which car makers are more exposed?
The traditional “three” adults makers, who have published their mark throughout the continent since the signing of the North American Free Trade Agreement in 1994, are the most vulnerable to profit. Analysts said that General Motors was the most vulnerable, as the owner of Chrysler Stelliantes was not better. Ford is the least exposed because it imports the smallest share of vehicles from outside the United States.
General Motors Chevrolet Silvrado is made at its factory in Mexico and Oshua in Canada, which increases its exposure. James Picarillo, a BNP Paribas analyst, said that although the car maker may transport production to the United States to about 300,000 trucks 350,000 trucks currently importing it, this switch will take 12-18 months with the reservations of suppliers and appointed workers.
He said this would add about one billion dollars to employment costs, as workers in the United States got more than Mexico. GM operational profits will take 7 percent success, but that seemed favorable compared to a 50 percent possible reduction that could come from a 25 percent tariff.
“It appears that the opposite winds are one billion dollars like a controlled scenario at the present time,” said Picarillo.
He added that investors and analysts were assumed that any tariff for goods from Canada and Mexico would eventually negotiate, because “the numbers become very large so that the industry cannot be properly escaping.”
Did German car makers save if customs duties are not imposed against the European Union?
Even before any tariff against the European Union, European car makers are exposed. Volkswagen is in the worst position, with 45 percent of its American sales of cars made in Mexico and Canada, although the American market represents a small share of the total group revenues.
With all the vehicles that the United States sells from its luxurious brands in Audi and Porsche, which was manufactured outside the country, Moody's is estimated that a 25 percent Mexican tariff will reduce the global profits of the Volkswagen Group before interest and taxes by more than 15 percent.
“We have a factory in Mexico, independently of the administration at work, our plan is to become stronger in the United States,” said Gernot Doliner, CEO of Audi last month. But he added: “We believe that the customs tariff is wrong and we believe in free trade.”
His German auto colleague BMW is less likely, as 65 percent of her cars are designed in the United States locally while she is also a net source from the United States.
“There may be volatile positions that may be less predictable, but I am really optimistic,” said Jochen Goller, a BMW board member responsible for customers, brands and sales. “I think it will be a growth market for us next year.”
Will Tesla appear as a winner of Trump's tariff?
Investors have commented hopes that Elon Musk's close relationships with Trump will protect Tesla from the repercussions of the president's policies, but the world's largest electric cars maker is still being exposed.
Tesla collects all its vehicles sold in the United States locally, but it is sources from 20 to 25 percent of its components for Form 3, the Y and Cybertruck model from Mexico, according to Barclays.
“Over the years, we have tried to settle our supply chain in every market, but we still rely on spare parts from all over the world for all our business,” Finance Director Vibahv Taniga said at a press conference last week. From a blow to her profit from Trump's tariff.
The company can also be a target of revenge definitions by Canada. Former Finance Minister Christia Frayland, who runs to replace Trudeau as Prime Minister, said that Ottawa must be reduced from the American definitions by adding huge fees to Tesla vehicles to punish musk.
The tariff war also comes at a time when Tesla is wrestling with a decrease in sales in Europe due to the slowdown in the demand for electric cars, the increasing competition and consumer reactions against the political activity of musk.
According to the French Industry Association, La Platiforme Automile, Tesla sales in January in France were 63 percent less than the previous year.
What are the least -like car makers?
The smaller Japanese auto manufacturers, such as Mitsubishi Motors and Subaru, can benefit from a lack of production in Mexico and Canada. Honda is also relatively well assembly, as two -thirds of its sales are assembled in the United States locally, according to Barclays.
Takao Kato, CEO of Mitsubishi Motors, told reporters on Monday that the customs tariff will not have a little impact on the company and that it may receive the slight “back wind” from increasing exports to the United States if the customs tariff to the rest of Asia is not extended.
However, he then retracted his comment, saying: “On the balance, it seems that there is more opposite winds.” He explained that Japan can benefit if it can get rid of being a target of heavy tariffs.
Renault is also unlikely because there is no sales in the United States or Canada. The shares of the French auto industry decreased by only 0.6 percent on Monday, much lower than the fall suffered by other European car makers with a greater exposure to the United States.
Stephen Retman, an analyst at Bernstein, said Renault, one of the few European brands that does not issue a warning in profits last year, was “working very well” in Europe. The company's exposure to tariffs is through its share in Nissan, which continues Currently, merging with Honda.
But while the company is lower than competitors, Restman added: “There are not many winners of all of this. It reduces wealth, which reduces GDP, which reduces car sales.”
