Global tariffs on imported cars might have a limited effect on Taiwanese autoparts makers in the supply chain, despite major automakers warning that the duties would harm their operations and lead to a slowdown in global car shipment growth, Yuanta Securities Investment Consulting Co (元大投顧) said on Tuesday last week.
The threat of a 25 percent tariff on imported cars and parts contemplated by US President Donald Trump’s administration has sent shivers through the global auto sector, and uncertainty in the global auto industry is rising after China, the EU and Canada recently announced they might retaliate with punitive tariffs on US cars.
The potential US tariffs and possible retaliatory tariffs from other governments could particularly harm demand for German brands such as BMW, Mercedes-Benz and Volkswagen, Yuanta Securities analysts led by Kenny Chen (陳景文) said in a note.
While the state of the industry remains uncertain, further negotiations on cancelations of tariffs are expected to serve as a short-term tailwind for global vehicle demand, the analysts said.
Accelerating localization could be a long-term solution, but would take time to execute, they said.
However, “Taiwanese suppliers’ client bases are mostly diversified, and many have followed their clients’ localization strategies,” the analysts said. “We therefore see a limited impact on the conventional automobile supply chain.”
As for the potential effect on suppliers of electric vehicle maker Tesla Inc, the analysts said the US company is making progress constructing its Shanghai plant, but would still need at least two more years to ramp up production there.
“Overall, global disputes have not yet calmed, and to what degree Taiwanese supply chains are to benefit or suffer is hard to quantify,” the analysts said.
Investors might have to prepare for the next round of tariff changes and their likely effect on major auto brands, they added.
In the past month, shares of several autoparts makers have outperformed the broader market’s 1.02 percent fall, with Cub Elecparts Inc (為升) rising 8.48 percent, Hota Industrial Manufacturing Co (和大) increasing 2.07 percent and Cayman Engley Industrial Co Ltd (英利) rising 3.41 percent, while Tong Yang Industry Co (東陽) fell 6.66 percent and Lu Hai Holding Corp (六暉) dropped 3.76 percent, Taiwan Stock Exchange data showed.
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