Analysis-US tariffs upend Japanese carmakers' Mexico gambit - and add to Nissan's woes

Daniel Leussink

Wed, Apr 2, 2025, 8:58 AM 5 min read

By Daniel Leussink

TOKYO (Reuters) - Japanese automakers person agelong relied connected the "dependable and affordable" entreaty of their system cars to thrust U.S. sales, acknowledgment successful portion to low-cost accumulation successful Mexico. Now, U.S. President Donald Trump is turning that concern exemplary connected its head.

Trump has announced 25% tariffs connected car imports that are owed to instrumentality effect connected April 3. While the longer-term fallout remains unclear, Nissan, Honda, and different carmakers whitethorn request to rise sticker prices, manufacture experts say, including connected system models that people the astir price-sensitive buyers.

It is different large headache peculiarly for troubled Nissan, fixed its reliance connected some the U.S. marketplace and Mexican production.

Last year, large Japanese carmakers exported astir 880,000 vehicles to the United States from Mexico, according to information from Mexico's nationalist statistic agency. While Toyota's Tacoma pick-up was the astir exported model, Nissan had the biggest stock of immoderate automaker, accounting for much than a third, with 327,000 vehicles, the information showed.

The Sentra was Nissan's astir exported model, with 180,000 of the compact sedans going crossed the border. The car starts astatine $21,590, according to Nissan's website.

"The crushed cars are made successful Mexico is due to the fact that costs are cheap, allowing automakers to nutrient system vehicles there. A batch of those cars being made successful Mexico are models wherever it is hard to rise the prices, oregon if you do, you tin lone rise the terms by a little," said Koji Endo, caput of equities probe astatine SBI Securities.

In 1 scenario, Goldman Sachs sees tariff-related terms hikes depressing Japanese automakers' income and operating profits successful the existent fiscal year.

Mazda could spot the biggest deed with a 59% nett reduction, with Nissan adjacent with an estimated 56% drop, according to Goldman estimates. Toyota, the world's top-selling carmaker, would spot a 6% diminution and Honda would instrumentality an 8% hit.

That is particularly atrocious quality for Nissan, which is already flailing successful the United States owed to an ageing line-up and deficiency of hybrid models.

It chopped its nett forecast 3 times successful the fiscal twelvemonth conscionable ended and has had its indebtedness downgraded to "junk".

Nissan's caller main executive, 46-year-old Ivan Espinosa, a Mexican nationalist who was earlier its readying boss, has promised to dramatically chopped the clip it takes the institution to make caller cars.

Slow decision-making astatine Nissan was 1 of the reasons wherefore its merger talks with Honda collapsed successful February, Reuters has antecedently reported.