Nissan Motor has hit a rough patch recently, grappling with a series of challenges. Back in February, the company revealed a significant drop in profits and slashed its financial forecast for the third time in a year due to dwindling sales. Potential merger discussions with Honda fell through, forcing Nissan to embark on drastic cost-cutting measures, including thousands of job cuts.
Now, there’s another looming threat on the horizon. President Trump is warning of new tariffs on imports from Canada and Mexico, which could deliver another blow to Nissan. A substantial portion of the nearly one million vehicles Nissan sold in the U.S. last year came from Mexican plants, approximately a third, to be exact.
“If that happens,” Nissan’s CEO, Makoto Uchida, stated during an earnings call, “it’s going to significantly impact our bottom line.”
Most automakers would be impacted by these tariffs, but for those already in financial straits, like Nissan and Stellantis—the parent company of Chrysler, Dodge, Jeep, and Ram—the stakes are particularly high. Stellantis is also in the midst of a massive operational revamp.
Trump has floated the idea of imposing tariffs up to 25% on many goods from Canada and Mexico. This region has been part of a tariff-free trade zone for almost three decades, so such a move would seriously drive up automakers’ costs, likely causing car prices to jump and throwing a wrench into supply chains that involve components crossing borders multiple times.
Moreover, the Trump administration hasn’t clarified how U.S.-produced parts sent to Canada and Mexico for assembly before returning stateside would be treated under the new tariff regime. Automakers and suppliers might be forced to reevaluate their strategies in North America, possibly resulting in job cuts and reduced production.
The Anderson Economic Group in Michigan predicted that these tariffs could add between $1,000 and $4,000 to the cost of a new vehicle, possibly more if manufacturers can’t mitigate the impact. Patrick Anderson, the firm’s CEO, pointed out that such tariffs would come at a cost to manufacturers and suppliers, as they might not be able to adjust car prices or existing contracts immediately.
Stellantis recently announced a 70% decline in net income for 2024, down to 5.5 billion euros, or about $5.7 billion. The company also recently lost its chief executive, with no new appointment on the horizon. During an earnings discussion, Stellantis’s chairman, John Elkann, frankly admitted that last year was not something they were proud of.
The potential introduction of tariffs is likely to pose additional challenges for Stellantis. A third of its profitable Ram pickups are assembled in Mexico, and various Jeep models are made there too. In Canada, Stellantis produces Chrysler Pacifica minivans and plans to roll out the Dodge Charger soon at a plant that’s being retooled for Jeep production.
Elkann indicated they are preparing a variety of strategies to counteract the tariffs’ impact but remained tight-lipped about specifics. It’s plausible that they may boost Ram production in U.S. facilities while scaling back output from their Mexican plants.
Similarly, General Motors, which also manufactures a significant number of vehicles in Mexico, is poised for strategic shifts if tariffs are enacted. While G.M. seems financially robust, having solid sales growth in North America and having cut back on less profitable ventures, the tariffs would still necessitate adjustments.
Ford Motor, another automaker in the midst of restructuring, faces its own challenges. The company relies significantly on Mexican components, with a plan to begin U.S. production of larger trucks. Ford’s CEO, Jim Farley, remarked that tariffs could severely disrupt the U.S. auto industry.
Volkswagen, too, might feel the pinch, as a large portion of its U.S. sales comes from vehicles made in Mexico.
For Nissan, potential tariffs could force a major overhaul of its manufacturing strategies. Facing global sales downturns, the company reported a notable loss in the final months of last year compared to the previous year. They have already revised their financial expectations downwards, projecting more losses this fiscal year.
Nissan’s turnaround plan involves reducing global production and workforce, and seeking new partnerships following failed talks with Honda. Yet, Trump’s proposed tariffs complicate these efforts. Last year, Nissan sold over 300,000 Mexican-manufactured cars in the U.S., including models such as the Sentra and Versa.
In response, Uchida suggested that production could be shifted to Japan, a country not currently facing new tariffs, as a contingency plan. “Some of these models could be produced in Japan,” he noted, indicating this as a viable option to counter a potential 25% tariff.
