US tariffs sink Japanese auto giants

The impact of the US tariffs continues to weigh like a boulder on the balance sheets of the Japanese automotive industry, fuelling the uncertainty about the industry's prospects. According to data compiled by the Kyodo Agency, the aggregate net profit of the seven largest carmakers in the Rising Sun recorded a 27.2% drop in the April-September period compared to the previous year, a figure that marks a worrying reversal of the trend and a general deterioration for the first time since the Covid-19 emergency.

Overall, the analysis reveals, the tariffs imposed by the US have eroded the total earnings of the seven Japanese majors by an estimated ¥1.5 trillion, equivalent to about EUR 8.4 billion. In addition to causing net losses for the Nissan, Mazda and Mitsubishi automakers, the escalation of tariffs on imported cars in the US is accompanied by persistent bottlenecks in the global supply chain, particularly the shortage of semiconductors, and slowing demand in the electric vehicle market. Variables which, according to analysts, make the trajectory of the entire industry even more uncertain.

The agreement signed between Washington and Tokyo to reduce the tariffs on car imports to 15% is in fact only a partial relief: the rate remains six times higher than the 2.5% rate in force before April, and will continue to exert significant pressure on profit margins. The Toyota alone, the world's largest car manufacturer by sales volume, quantified the effect of the tariffs imposed by the Trump administration as a reduction in operating profit of about 900 billion yen (5.05 billion euro), a burden that has caused its North American operations to slide into the red.

According to observers, smaller manufacturers will not be able to absorb the price shock compared to their larger competitors. In addition to being forced to continue with price increases, they may be forced to seek closer alliances with rival manufacturers, withdraw certain models from their sales lists, or even downsize their presence in the US.