By AFP
April 2, 2025
Asahi Tekko president Tetsuya Kimura has called on Donald Trump to 'give me a break' - Copyright AFP Richard A. Brooks
Hiroshi HIYAMA
Business was already tough for auto parts maker Asahi Tekko, but with US car tariffs due to bite this week its president has a simple message for Donald Trump: “Give me a break.”
The 425 workers at the company are some of the 5.6 million Japanese people employed directly or indirectly in the auto sector who are now fearful about their future.
“There is no point in learning about this only two or three months in advance,” company president Tetsuya Kimura said at Asahi Tekko’s factory in Hekinan in central Japan.
“Frankly speaking, I want to say: ‘Give me a break’,” Kimura, a former engineer at Toyota, his current firm’s main customer, told AFP.
At the plant, where the noise of clanging metal fills the air, robotic arms and machine tools busily produce precision brake, engine and transmission components.
The factory is in the Aichi region, Japan’s industrial heartland where Toyota, the world’s biggest automaker by sales, has its global headquarters.
Autos have for decades been one of Japan’s biggest success stories.
Last year vehicles accounted for around 28 percent of the country’s 21.3 trillion yen ($142 billion) of US-bound exports, and roughly eight percent of all Japanese jobs are tied to the sector.
– Ripple effect –
But rising costs, tougher emission rules, a global shift toward electric vehicles and a shrinking and ageing Japanese population have pressured the industry for years.
Honda and Nissan recently abandoned efforts to merge.
The US president last week announced he would impose 25 percent duties on imports of all vehicles into the country from April 3 — hours after he is due to unveil sweeping measures against trading partners for what he says are years of being “ripped off”.
For Japan, this is despite talks in February between Trump and Prime Minister Shigeru Ishiba that saw a joint statement hailing a “new golden age for US-Japan relations”.
Japanese companies are also the biggest investors into the United States. Trump’s policies, Ishiba said last week, are “difficult to understand”.
To compensate for the tariffs, firms such as Toyota, Honda and Nissan will likely hike prices for US consumers, potentially hitting demand for their vehicles — and by extension for parts.
That may come on top of a possible global slowdown, triggered by unpredictable US policies.
The tariff “will hit auto production hard, undermine confidence, and reduce orders”, Moody’s Analytics said in a report about Japan’s business sentiment.
“Given the long and complex supply chains in car manufacturing, the impact will ripple through the economy,” it said.
And Natixis economist Kohei Iwahara told AFP: “Some of the bigger companies could actually transfer their production overseas, and that would have consequences on the smaller auto part companies.”
– Added uncertainty –
The rapid global shift toward electric vehicles has already been forcing some Japanese parts makers to explore opportunities outside of the sector, said Takeshi Sasaki, president of Hokuriku Light Metal Industry.
Hokuriku, based in the Saitama region near Tokyo, makes specialised parts for vehicles under research and development for brands including Honda and Suzuki.
But it is now looking to develop parts for industrial robots in order to ensure its future, he told AFP.
“EVs require fewer parts than internal combustion engine vehicles,” Sasaki said.
“Now we have this tariff. This adds uncertainty on top of the uncertainty that we already had. Forex is a risk. The US economic outlook is at risk.” he said.
Kimura’s firm is also trying to grow a new business that offers tools and know-how to improve efficiency while reducing emissions.
“I am afraid there will be many suppliers that will suffer and go into the red if vehicle production volumes were to fall.
“So I think each of the suppliers will have to work very hard to survive,” Kimura said.
“I never expected (Trump) to go this far.
“Now that this is happening, we just have to move forward and work as we must.”
Carmakers face doubts and jolts over US tariffs
By AFP
April 1, 2025
Will US consumers continue to buy cars after tariffs raise sticker prices? - Copyright AFP/File SAUL LOEB
Taimaz SZIRNIKS
Raise prices or cut into their margins, open or close factories: carmakers must soon make major decisions as the United States imposes stiff tariffs on imported vehicles.
The 25-percent tariffs that the administration of President Donald Trump is imposing as of April 3 will apply to cars and car parts not manufactured in the United States.
But all carmakers will be impacted, as even US automakers import foreign parts and manufacture vehicles for the US market in neighbouring Canada and Mexico.
The Bank of America estimates that the tariffs will apply to 7.3 million vehicles, or eight percent of global sales, and will expose carmakers to added costs and chaos.
– Taking stock –
One, albeit temporary, strategy to cope with the new tariffs is to avoid them by shipping as many vehicles as possible to the United States before they come into force.
“Shipments have expanded quite a bit to absorb the first shock” of the tariffs, said Fitch Ratings Director Cigdem Cerit.
“Everyone did build a little buffer,” she added.
South Korea’s Hyundai was among the automakers that most built up its stock of cars, according to Cox Automotive, an automotive services firm. Meanwhile, Stellantis ate into its ample stocks that had weighed on results in previous quarters.
But the stocks will likely last no more than a few weeks, especially if Americans rush to dealers to snap up any remaining deals.
“After an initial, short surge in buying, we expect vehicle sales to fall, new and used prices to increase, and some models to be eliminated if tariffs persist,” said Jonathan Smoke, chief economist at Cox Automotive.
– Sticker shock –
It is an open question about how much car prices will rise and to what extent sales will fall.
The Bank of America estimates that US vehicle prices would rise by approximately $10,000 if manufacturers fully pass on the cost of tariffs and maintain their profit margins.
“However, we don’t expect consumers would absorb the price increase in full,” said analysts at the bank.
Carmakers “are more likely to sell vehicles at breakeven until they rebalance the production footprint,” it said, estimating that US consumers would see price hikes of around $4,500.
Mid-range imported vehicles are likely to feel the pinch, such as the Chevrolet Silverado pick-up and the Toyota Rav4 SUV.
But even manufacturers like Porsche could have trouble passing on the cost of tariffs on low-end models like its Macan SUV, said Fitch’s Cerit.
Ferrari was the first carmaker to announce a hike in prices — as much as 10 percent — on vehicles sold in the United States, its top market.
A major question is whether consumers continue to buy the same vehicles at a higher price, said Deloitte auto analyst Guillaume Crunelle.
He believes that is unlikely as “people buy in the price bracket that corresponds with their means”.
– Made in the USA –
Donald Trump has stated that the goal of the tariffs is to encourage manufacturing jobs to return to the United States, but it is unclear whether that will be achieved.
Crunelle said companies will ask themselves: “Is it more competitive to manufacture in the United States, with a weaker market, or to pay customs duties?”
US manufacturers are still hoping that tariffs will be reduced on vehicles imported from Canada and Mexico, where they have numerous factories.
“Manufacturers have need for certainty,” said automotive sector analyst Sebastien Amichi at the consulting firm Kearney.
Hyundai and Stellantis have announced the opening or reopening of factories since Trump’s November re-election.
But such moves take time: up to several years to bring a factory online. And suppliers, which are also in a weak position due to the switch to electric vehicles, must also follow manufacturers.
European and Japanese carmakers that play Trump’s game face a double cost according to Deloitte’s Crunelle: in addition to building new factories they have to pay the costs of laying off workforces at home.
Some may refuse to have their arms twisted into manufacturing in the United States.
“I’ll bet that certain manufacturers will prefer to reduce their production costs” at home rather than set up in the United States, Crunelle said.
Ford’s US auto sales dip in first quarter as tariffs loom
By AFP
April 1, 2025
Ford electric drive Michigan factory. — © AFP
Beiyi SEOW
Auto giant Ford reported a slight drop in first quarter US sales Tuesday, while investors await details of President Donald Trump’s upcoming tariffs this week and assess the effects of duties on major carmakers.
The automaker reported a 1.3 percent dip in sales in the world’s biggest economy, to 501,291 vehicles, compared with the same period in 2024.
This was mainly due to the discontinuation of certain vehicle models and rental fleet sales timing, the company said.
But its first quarter figure exceeded a forecast by automotive research firm Edmunds.
Ford maintained in a statement that it saw “strong retail sales in March.”
It pointed to the sales of its best-selling F-Series pickup trucks and the Ranger and Maverick models as boosts to its overall performance.
But economists warn that Trump’s sweeping tariffs on autos and parts, over time, could cause average auto prices to surge by thousands of dollars.
Auto tariffs of 25 percent are set to kick in Thursday. Trump is due to announce additional reciprocal levies midweek to address trade practices his administration deems unfair.
The reciprocal action could further affect US neighbors Canada and Mexico, both key players in North American vehicle manufacturing supply chains.
JPMorgan analysts have estimated that over 80 percent of Ford’s US sales are produced domestically.
The American Automotive Policy Council representing the big three automakers have warned that tariffs should be implemented in a way that avoids lifting costs for consumers and preserves the industry’s competitiveness.
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