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Import tariffs could do some bad things to Subaru in the US

Fadu News 2018-08-07 05:54:45

The US government is still figuring out whether or not to impose a number of tariffs on imported goods, including many elements of the automotive industry, but some automakers have already begun bracing for the storm.

Subaru predicts that it will have to deal with a "big impact" if the Trump administration's tariffs extends to automotive products coming from Japan, Bloomberg reports, citing a recent Subaru press briefing in Tokyo. "We're studying what the impact might be but there are too many unknowns at this point, so we want to refrain from giving a specific figure," said Toshiaki Okada, Subaru's CFO, at that briefing.

Of the roughly 671,000 vehicles Subaru sold in the US in the last year through March, only half were built in the US. Thus, any enacted tariffs would potentially affect half of Subaru's US sales. Both Subaru and Toyota, which is its largest shareholder, have gone on record in recent weeks expressing dismay at any potential auto-import tariffs.

These tariffs would hit Subaru harder than any other major Japanese automaker. According to Bloomberg's data, Subaru gets a higher share of its revenue from the US than anyone else, including Honda and Nissan. If prices were to suddenly rise on half of Subaru's lineup, that could be Bad News Bears for the company's bottom line. Subaru just had its best July ever, in addition to a 6-percent year-over-year gain in annual sales through July. It's likely that if it had to raise the cost of its vehicles to jibe with the tariffs, those sales achievements could be in jeopardy.

Subaru has produced more than 5 million vehicles at its assembly facility in Lafayette, Indiana, which employs more than 4,000 local workers. The plant is currently responsible for the Legacy and Outback, in addition to the new Ascent, which entered production earlier this year. It's Subaru's only manufacturing facility outside of Japan.

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