Autos_ Auto Parts Sectors_ Reports on tariff imposition on automobiles_ Presenting scenario analysis again and monitoring risk of retaliatory tariffs. Sun Feb 16 2025

Summary of the Conference Call on Autos/Auto Parts Sectors Industry Overview - The conference call focused on the Autos/Auto Parts Sectors, particularly the implications of potential tariffs on automobiles by the Trump administration, as reported by various media outlets including the Nikkei on February 14, 2025 [1][4]. Key Points and Arguments 1. Tariff Implementation Timeline: There is speculation that tariffs may be imposed around April 2, 2025, but the timing and potential retaliatory tariffs remain uncertain [1][4]. 2. Affected Companies: - Nissan and Mazda are expected to be the most impacted due to their reliance on imports from Mexico (30% of U.S. sales) [4]. - Honda follows, with about 20% of its U.S. sales coming from Canada [4]. - Toyota is less affected due to a higher import ratio from Japan and overall profit levels [4]. - Subaru and Mitsubishi Motors are minimally impacted as they do not import from countries other than Japan [4]. 3. Impact of Retaliatory Tariffs: If retaliatory tariffs are enacted, the financial impact on companies could increase significantly. For instance, Honda's potential impact could reach approximately ¥760 billion, representing 57.6% of the FY2025 operating profit estimate, while Toyota could face an impact of ¥1.45 trillion, or 30.2% [4][5]. 4. Stress Test Results: A simple stress test indicates that the introduction of a 25% tariff on imports from Canada and Mexico could exceed the overall profits of Nissan and Mazda, while Honda could see a 25% reduction in earnings [4][5]. 5. Mitigation Strategies: Companies are likely to share the burden of tariffs through: - Raising vehicle prices - Sharing costs with dealers - Reducing operational costs [5]. 6. Market Dynamics: U.S.-based OEMs like GM and Ford face significant risks from the proposed tariffs, and the situation will require close monitoring regarding the duration of tariffs and the types of vehicles affected [5]. Additional Important Information - Production and Supply Flow: The report includes detailed figures on U.S. retail sales volume and the production flow for Japanese and U.S. automakers, highlighting the reliance on imports from Canada, Mexico, and Japan [6]. - Earnings Impact Simulation: The report provides simulations of earnings impacts for various automakers under the assumption of additional tariffs, indicating significant potential losses for companies like Honda, Nissan, and Mazda [12][13]. This summary encapsulates the critical insights from the conference call, emphasizing the potential financial implications of tariff policies on the automotive industry and the strategies companies may employ to mitigate these impacts.