The 25% tariffs on imported vehicles that went into effect on Friday have shaken the global automotive industry and forced major carmakers to swiftly respond in divergent ways.
Companies from Stellantis and Hyundai are taking steps to protect their profits and customers as the new levies threatens to reshape the supply chains, pricing models and employment.
Automakers are scrambling to control costs as tariffs on imported parts and foreign-assembled vehicles will be implemented on May 3.
Some have chosen to idle production lines. Others are offering deep discounts or exploring domestic manufacturing expansions.
The share prices of the majority of automakers remained in red on Thursday, and during US premarket hours on Friday.
ICD examines the strategies adopted by automakers to deal with disruptions.
Stellantis suspends its plants and will temporarily layoff 900 workers
Stellantis, owner of Jeep, Dodge Ram, and Chrysler announced that it would temporarily close two assembly plants – one in Windsor, Ontario and another in Toluca Mexico – in response to tariffs.
Windsor, the plant that manufactures Chrysler Pacifica and Dodge Chargers, will be idle for a period of two weeks.
The Toluca plant, where Jeep Compass and Wagoneer S is assembled, will be closed from April 7 until the end of the month.
Stellantis said that the disruption would force them to layoff around 900 employees at its powertrain and stamping factories in Indiana and Michigan.
Stellantis’ spokesperson told MT Newswires that they “continue to assess” the US tariffs for imported vehicles. They will continue to work with the US government in regards to these policies.
Stellantis shares fell over 7% on Friday in premarket trading.
Ford’s From America for America’ discount will offer employee pricing to its customers
Ford, on the other hand, has opted for a more market-oriented approach and relied on its inventory to absorb cost pressure.
The Michigan-based automaker launched a program tentatively named “From America for America”, reportedly offering its employee prices, traditionally reserved for Ford employees, to all customers across the country.
Reuters reports that the company has been offering discounts since Thursday, even though it has not yet officially announced the plan.
Ford can now differentiate itself from its competitors who raise prices to offset tariff costs.
Ford’s position in the market is relatively advantageous. Ford manufactures 80% of its vehicles in the United States, giving it a larger buffer against tariffs compared to rivals who rely more on imports.
The company is still facing cost increases due to the tariffs on parts that were implemented on May 3.
The discount strategy is also in line with the “Made in America”, a message popularized by the Trump administration. Last week, the administration announced the sweeping duties in an effort to bring manufacturing back to US shores.
Ford’s share price fell by 3.67% in premarket trading on Friday.
Source: CNN HTML0
Volkswagen to introduce import fees on vehicles sold in US
Volkswagen has chosen a different path, informing its US dealers of upcoming price increases.
The New York Times reported that a German automaker sent a memo to its dealers on April 1, stating that it would be introducing a new import charge for its US vehicles in the coming weeks.
The government has also halted rail shipments from Mexico. However, maritime shipments are continuing. Dealers have been instructed to hold vehicles that are subject to tariffs at ports until further notice.
The company stated that the final price changes will be confirmed by mid April.
Cost pressures are not confined to vehicles assembled in the US. The Volkswagen Atlas and ID.4 built in Chattanooga in Tennessee are examples.
Both depend on imported parts which will be subject to new duties.
Volkswagen confirmed in a statement that it sent the memo to its dealers because it wanted “to be very transparent about how to navigate through this time of uncertainty.”
The company stated that it has the best interests of its dealers and customers at heart. Once we have quantified our impact on the business, we will share our strategies with our dealers.
Volkswagen’s stock price fell by more than 5% Friday.
Source : Statista
GM increases production of trucks in Indiana
General Motors has responded to the tariff shock with a boost in domestic production.
The company plans to increase production of its light-duty pickup trucks — Chevrolet Silverado, GMC Sierra — in its Fort Wayne, Indiana plant.
The move is part a broader strategy that GM CEO Mary Barra hinted to in January. She suggested that increased US production capacity could offset the risk of tariffs on vehicles manufactured in Mexico and Canada.
To facilitate the ramp up, GM will halt the production at the Fort Wayne plant between April 22 and 25, 2019.
According to an internal communication with United Auto Workers, the plant expects to create between 225 and 2,500 jobs and hire several hundred temporary workers.
According to local union officials, additional overtime days could be scheduled in order to meet the new goals.
GM’s share price fell by more than 5% in pre-market trading Friday.
Hyundai warns of possible price hikes
Hyundai Motor Company has also warned of the possibility of a rise in vehicle prices.
In a letter to dealers, Hyundai Motor North America’s CEO Randy Parker warned that prices for vehicles sold wholesale after April 2 were no longer guaranteed.
Parker acknowledged that Hyundai’s investments in the US were “firmly established”, and that the company relied on relatively few imports from Mexico or Canada.
The Korean automaker, however, said that it continues to monitor and review policies to maintain profitability.
Official pricing changes have not yet been announced, but officials from the company in Seoul say they are “closely examining” their options.
This post may be updated as new information becomes available.
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