Tariff Trials: Automotive Supplier Says It Won't Bear the Increased Costs Brought By Trade Wars
Automakers and their suppliers are in business to do one thing: Make money for themselves and shareholders. Because of that, it should come as no surprise that one major player in the industry has vowed not to eat the costs of Trump’s proposed tariffs. Adient plc recently said it is not able to float the costs on an ongoing basis.
Adient President and CEO Jerome Dorlack told investors this week that, “We’ve made it clear to them (automakers and customers) that this is not – at a 25 percent or even at a 10 percent level – a burden that Adient is prepared to take on to our P&L on an ongoing basis and there will be a need for recovery that has to then be passed through the value chain.”
In summary, auto seat supplier Adient won’t cut into its profit margins to compensate for the added costs tariffs bring and will pass them onto its customers, which in this case are the automakers. In turn, they are likely to adjust retail pricing to account for the increased costs, driving up vehicle prices on dealers’ lots.
Adient is one of the earliest public companies to come up with a statement on how tariffs could move the financial needle, and it could be the canary in the coal mine for other suppliers eying similar measures. The threat of tariffs has driven businesses across several industries into overdrive as they attempt to navigate uncertain policies and maintain their bottom lines.
[Images: BMW, Volkswagen]
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Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.
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What is Adient's long term plan for this?
Threats and woe may be a short term response.
Longer term, will they look for new suppliers- possibly domestic? or seek to manufacture its own components- possibly domestically?
Dealing with the environment is something every business has to do every day. If it cannot come up with a plan to pivot it will be replaced by competition.
I'm honestly here for it. We have been paying for it for years in one way or another and it's high time that this gets shaken up.