Nissan Motor has suffered a number of setbacks in current months.
In February, it reported a plunge in revenue and reduce its outlook for the third time prior to now 12 months because it faces declining gross sales. Merger talks with Honda collapsed, and the corporate is scrambling to slash prices and reduce 1000’s of jobs.
Now it’s bracing for what may very well be one other shock to its enterprise: the tariffs that President Trump is threatening to impose on items imported from Canada and Mexico. A couple of third of the practically a million automobiles Nissan bought in the US final yr have been assembled in Mexican vegetation.
“If it kicks in,” the automaker’s chief govt, Makoto Uchida, stated in an earnings convention name final month, “that’s going to be a huge effect to revenue.”
Virtually all automakers could be affected by the tariffs. However the impression might fall most closely on these already going through monetary hassle. That features not simply Nissan but in addition Stellantis, the maker of Chrysler, Dodge, Jeep and Ram automobiles, which is racing to reorganize and streamline its operations.
Mr. Trump has urged levies of as a lot as 25 p.c on most items manufactured in Canada and Mexico — each buying and selling companions of the US and members of a North American commerce bloc that has operated basically as a tariff-free commerce zone for the final three many years.
A tariff of that dimension would considerably improve automakers’ prices, increase the costs customers pay for brand spanking new automobiles and vans, and disrupt advanced provide chains that always contain engines, transmissions and different elements crossing borders a number of occasions earlier than completed automobiles arrive on supplier tons.
The Trump administration has not but defined how the tariffs would apply to U.S.-made engines and different components which are despatched to Canadian and Mexican vegetation earlier than returning to the US in accomplished automobiles.
For a lot of automakers and components suppliers, the tariffs would in all probability pressure them to chop jobs and manufacturing, and rethink their manufacturing methods in North America.
Anderson Financial Group, a consulting agency in East Lansing, Mich., estimates that tariffs of 25 p.c would add $1,000 to $4,000 to the value of a brand new car, and as a lot as $10,000 if producers are unable to take steps to cut back the impression.
“Producers and suppliers are going to get caught consuming a few of the price that’s imposed on them in a hasty tariff, as sticker costs on retail automobiles and current gross sales contracts can’t be modified instantly,” the agency’s chief govt, Patrick Anderson, stated.
Final week, Stellantis reported that internet revenue in 2024 fell 70 p.c, to five.5 billion euros, or $5.7 billion. Its chief govt resigned late final yr, and the corporate could not have a substitute for a number of extra months.
In a current earnings name, John Elkann, the automaker’s chairman, stated that final yr “is a yr we aren’t pleased with.”
Mr. Elkann acknowledged that the tariffs might make a turnaround tougher for Stellantis. A couple of third of its extremely worthwhile Ram pickups are assembled in a plant in Saltillo, Mexico. It additionally makes two Jeep fashions at a second Mexican plant, in Toluca. It makes Chrysler Pacifica minivans at a plant in Windsor, Ontario, and is scheduled to start making the Dodge Charger in the identical manufacturing facility this yr. A second plant, in Brampton, Ontario, is being retooled, with plans to make Jeeps there when it reopens.
Mr. Elkann stated the corporate was getting ready a sequence of measures to restrict the impression of tariffs, however declined to offer particulars. It’s doable that the automaker might improve Ram manufacturing in its U.S. truck vegetation and reduce output from Saltillo.
“We’re ready and have totally different situations in place,” Mr. Elkann stated. “Which of those situations will play out is untimely for us to debate.”
Like Stellantis, Normal Motors makes a good portion of its pickup vans in Mexico, along with the Chevrolet Blazer and GMC Terrain sport utility automobiles. It has stated it might soften the blow of any tariffs by adjusting its manufacturing to make extra automobiles in U.S. vegetation and import fewer from Mexico and Canada.
However G.M. is on a lot stronger monetary footing than different giant automakers. The corporate’s gross sales have been rising in North America, its most worthwhile market, and it has been scaling again struggling divisions, together with its operations in China, and has shuttered its self-driving taxi division, Cruise.
Ford Motor — one other producer within the midst of a turnaround — makes the Mustang Mach-E electrical car in Mexico. It additionally has a plant in Canada that’s scheduled to start out making giant pickup vans subsequent yr. Whereas a majority of its fashions are assembled in U.S. vegetation, it depends on Mexican vegetation and suppliers for 1 / 4 or extra of the components that go into lots of its fashions.
Ford’s chief govt, Jim Farley, stated in a current investor presentation that tariffs would “blow a gap” within the U.S. auto business.
Volkswagen might additionally really feel a squeeze from tariffs as it really works to chop prices and reinvigorate its backside line.
In 2024, Volkswagen bought greater than 230,000 Mexican-made automobiles in the US, about 60 p.c of its gross sales within the nation, the corporate stated.
That features three of Volkswagen’s top-selling automobiles in the US — the Jetta sedan and the Taos and Tiguan S.U.V.s. The corporate has one manufacturing facility in the US, in Chattanooga, Tenn., the place it makes different S.U.V.s.
For Nissan, tariffs might pressure a broad reshaping of its manufacturing footprint. New levies on items made in Canada and Mexico would increase Nissan’s prices at a time when it’s scrambling to slash bills.
Amid a world hunch in gross sales, the automaker reported a lack of 14.1 billion yen, or $93.6 million, for the three-month interval from October via December, in contrast with a revenue of ¥29.1 billion in the identical interval in 2023.
The corporate additionally revised down its outlook, saying it anticipated a lack of ¥80 billion within the fiscal yr that ends March 31.
As a part of its turnaround plan, Nissan goals to chop world manufacturing by about 20 p.c, which would come with closing three vegetation and shedding some 9,000 staff. Since ending merger talks with Honda, the corporate has been on the lookout for a brand new accomplice or investor to help its restoration effort.
Mr. Trump’s proposed tariffs would complicate that process. Final yr, Nissan bought greater than 300,000 Mexican-made automobiles in the US. They embody the Sentra, Versa and Kicks fashions.
Mr. Uchida stated Nissan might shift manufacturing of these fashions to vegetation in Japan, a rustic Mr. Trump has not focused for brand spanking new tariffs — a minimum of to date.
“A few of these fashions may very well be produced in Japan,” he stated. “In order that’s one backup plan to reply to the doable 25 p.c tariff.”
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