JAPANESE automakers have few immediate options to offset the impact of the additional US tariff on cars. Toyota Motor Corp, Honda Motor Co and other domestic manufacturers will likely rely on strong sales of their popular fuel-efficient models in the key market, potentially coupled with price increases, analysts say. An additional 25 per cent tariff that took effect on 3 April is expected to significantly dent profits at Japanese automakers, with Japan’s top two carmakers — Toyota and Honda — projecting a 35 per cent and 70 per cent plunge in net profit, respectively, for the year through March 2026.
Auto manufacturers can increase local production or pass the higher tariff costs on to customers, among other effective measures to mitigate the impact. Raising prices could help ease the pressure on profitability, but the strategy risks driving away customers.
Toyota Chief Financial Officer Yoichi Miyazaki said at a press conference on the company’s latest earnings that it would not make any hasty moves and ruled out an immediate price hike, describing it as a risky strategy.
It may take years to increase local production, as carmakers will need to reorganize their supply chains, and they may be reluctant to do so without knowing how long the tariffs will remain in place, analysts said.
Kyodo
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