Automotive Supply Chain Risk Digest #441

July 25 - 31, 2025, by Elm Analytics

Aug 01, 2025

Dear Reader,

We’re trying something new:

This issue attempts to distill the key takeaways from the flurry of H1/Q2 earnings calls over the past week.

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Have a great weekend!

Nick Gaydos

CHANGE IN MANAGEMENT

Renault CEO named, faces electrification challenge
JLR CEO exits amid rising headwinds

CLOSING

Nissan closing Mexico plant by 2025

DISASTER

Japan automakers suspend plants after quake, tsunami

EARNING DIP

Earnings/Forecasts across automakers, suppliers

EXPANDING

SK Tec expands Irapuato plant capacity

HUMAN CAPITAL

ZF plans powertrain job cuts

MERGERS, VENTURES, ACQUISITIONS

Union Pacific buys Norfolk Southern for $85B
Changan restructured under state ownership

OPENING

Avatr launches AI-driven EV factory
UTAS-NOVA opens lighting plant in Mexico
Denso to build India motor plant

REGULATION

Trump delays tariffs, hikes for Canada
US-Mexico pause tariffs for 90 days
US cuts Korea car tariffs to 15%
US-EU deal also lowers auto duties to 15%

Change In Management

Renault Group has named François Provost CEO effective July 31, following Luca de Meo's departure to lead Kering.

A 23-year veteran and current head of purchasing and partnerships, Provost will lead Renault through its next strategic phase, with the Futurama plan due this fall.

His appointment comes amid rising Chinese competition, falling van sales, and a $12.2 billion first-half loss.

Provost has led key alliances with Geely and Aramco and now faces urgent electrification and restructuring challenges.

Jaguar Land Rover CEO Adrian Mardell will step down at year-end, as the company faces EV launch delays, layoffs, and rising US tariffs. His successor will take over amid mounting pressure to steady JLR's electric pivot and navigate global trade headwinds.

Closing

Nissan will close its CIVAC plant in Morelos, its first factory outside of Japan, by the end of 2025. 11% of Nissan's Mexican output, currently at CIVAC, will be moved to Aguascalientes, as part of Nissan's global restructuring strategy.

Disaster

Toyota, Nissan, and Mitsubishi suspended operations at several coastal plants in Japan on July 30 following an 8.7-magnitude earthquake off Russia's Kamchatka Peninsula that triggered tsunami warnings. While no damage was reported, automakers acted swiftly to protect workers and avoid a repeat of the 2011 tsunami disruption. Toyota paused shifts at eight plants and delayed two more. Nissan evacuated its Oppama and Yokohama plants, and Mitsubishi halted production at Mizushima under local orders.

Earnings

An overview of many of the earnings calls from publicly traded companies over the past week:

Automakers

Aston Martin: ⬇️
Outlook deteriorated to breakeven profit, US/China demand headwinds.
- Expects roughly breakeven adjusted operating profit for 2025 due to US tariffs and weak demand in China. US tariff quotas complicate financial planning.
BMW: ➡️
Profits fell, but guidance, margin, and US footprint showed resilience.
- Q2 2025 pretax earnings around $3B. Maintains full-year EBIT margin target of 5–7%. US manufacturing/export base helped buffer tariff impacts.
Ferrari: ⬇️
Solid figures but outlook clouded by slowing sales/prices and margin concerns.
- Q2 net revenue about $1.95B. Shipments flat at 3.5k. Operating profit around $600M. EBITDA about $770M. Plans to reduce US pricing now that tariffs dropped from 27.5% to 15%.
Ford: ➡️
Tariff costs rising, profit guidance cut, but sales hold up on hybrids/gas models.
- Raised 2025 tariff impact estimate to $3B; $800M Q2 tariff costs. Full-year EBIT guidance: $6.5–7.5B. Q2 revenue $50.2B. EV/software segment Q2 operating loss $1.3B.
Lamborghini: ➡️
Profits slipped on currency/tariffs, but record deliveries and hybrid demand support outlook.
- H1 2025 operating income about $500M. Delivered 5.6k vehicles (H1 record). Net revenues about $1.9B. Operating margin decreased to 26.6%.
Mahindra & Mahindra: ⬆️
Profits and SUV sales rose strongly, guidance upbeat despite industry slowdown.
- Q2 profit about $395M. SUV sales surged 22%. Maintains SUV sales growth outlook up to 19% for FY26.
Nissan: ⬇️
Quarterly loss, high tariff exposure, major restructuring.
- Q2 operating loss around $535M. Fiscal year tariff impact forecast up to $2B. Global vehicle sales decreased around 10% to 707k.
Porsche: ⬇️
Margin outlook cut, profits plunged, China/EV/headwinds persist.
- Absorbed about $460M in US tariff expenses H1 2025. 2025 sales forecast $43–44B. Q2 operating profit around $180M. Restructuring costs about $1.5B. Full-year margin target now 5–7%.
Renault: ⬇️
Large net loss, weaker margin/cash flow guidance.
- H1 2025 net loss about $13B (mainly due to Nissan writedown). Net income excluding writedown about $540M. H1 revenue about $32B. Operating margin dropped to 6%. Revised free cash flow guidance: $1.2–1.7B.
Stellantis: ⬇️
Revenues/profits down, big losses, gradual recovery only if tariffs stabilize.
- H1 net revenues about $86B. Net loss about $2.7B. H1 tariff impact about $350M; full-year impact expected at $1.7B. Negative industrial free cash flow about $3.5B.
Toyota: ⬆️
Record sales and production, hybrid demand strong.
- H1 2025 global sales above 5.1M vehicles (+5.5%). Global production about 4.9M vehicles (+5.8%). Hybrids comprised 43% of sales.
Volkswagen: ⬇️
Cut forecast, facing ongoing tariff/trade margin pressures.
- Reduced forecasts for full-year sales and margins due to US tariffs and trade issues. Porsche and Audi brands expected to recover in 2026.

Suppliers

Albemarle: ➡️
Earnings beat, surprise profit, but still pressured by weak lithium pricing.
- Q2 net sales $1.33B. Lowered 2025 capex to $650–750M. Expects to generate positive free cash flow in 2025.
Aptiv: ⬆️
Profits and revenue ahead of guidance with positive demand trends.
- Q2 net sales $5.2B. Strong demand for advanced electronics offsets tariff headwinds.
BorgWarner: ⬆️
Raised revenue outlook, profit/revenue beat, strong demand offsets costs.
- Raised full-year revenue guidance to $14–14.4B. Q2 sales $3.64B.
Brembo: ⬇️
Notable declines in profit/revenue, cautious outlook.
- H1 EBITDA about $350M. Net profit about $110M. Revenue about $2.2B. Indirect tariff risks noted through customer exposure.
Denso: ➡️
Profits down, but guidance intact and mitigation plans in progress.
- Q2 operating profit about $720M. Full-year operating profit forecast about $4.5 billion. Forecasts $880 million in tariff-related impacts for the year.
Panasonic Energy: ➡️
Profits rose, but EV guidance likely to be revised down due to US policy.
- Q1 operating profit about $220M. Full-year operating profit forecast about $1.1B. Demand for energy storage mitigated impacts from EV tariffs.
PPG Industries: ➡️
Sales/profit flattish, outperforming in some segments, maintaining outlook.
- Q2 net sales $4.19B. Full-year outlook reaffirmed.
Samsung Electronics: ➡️
Chip profit collapsed, US/Tesla deal and recovery hopes balance risks.
- Q2 group operating profit about $3.4B. Semiconductor division profit about $290M. Tariff deal with US lowered trade risks. Expects boost from Tesla chip deal worth $16.5B.
SK Innovation: ⬇️
Heavy losses, battery division underperforms, but improvement expected.
- Q2 operating loss about $300M. Battery unit SK On to merge with SK Enmove for recapitalization ($1.4B increase). Anticipates improved Q3 margins and battery business recovery.
Valeo: ⬇️
Sales outlook cut, cost program offsetting but macro remains negative.
- Cut 2025 sales outlook by at least $1.2B to about $23.8B. Ongoing cost reductions as company and customers cope with market weakness and tariffs.

Expanding

SK Tec Mexicana, a Japanese-owned Tier 2 supplier, has invested $20M to expand its Irapuato, Mexico, plant. The upgrade boosts stamping, welding, assembly, and plastic injection output to 12M interior parts, supporting manufacturers like Aisin, Imasen, and TS-tech.

Human Capital

ZF has outlined a restructuring plan for its struggling powertrain division, with options including a carve-out, ramp-down, and up to 14k job cuts. The division's decline risks supply continuity as ZF navigates its EV transition and heavy debt burden.

Mergers, Ventures, Acquisitions

Union Pacific's $85 billion acquisition of Norfolk Southern would create the first coast-to-coast rail network, improving freight flow but raising concerns over reduced competition.

Once part of a major defense conglomerate, Changan is now a centrally owned automaker reporting directly to the Chinese government. The restructuring gives it more independence to specialize and innovate while staying aligned with China's national tech goals. Changan oversees a portfolio of brands including Avatr, Deepal, Qiyuan, Changan Auto, and Changan Kaicheng.

Opening

Speaking of which, Avatr has opened a highly automated EV plant that produces one car every 60s in Chongqing, China. Developed with Changan and Huawei, the plant supports over 1.2k configuration variations using AI and robotics.

China's UTAS-NOVA is investing $50M in a new plant in Aguascalientes, Mexico, to produce 6M exterior lighting units annually for global and Chinese automakers.

Denso Corporation will invest $30M to establish a new motor generator manufacturing facility in Gautam Budh Nagar, Uttar Pradesh, India.

Regulation

The Trump administration has postponed new global tariffs to August 7 at 12:01 a.m., with goods shipped before then and arriving by October 5 exempt.

Canada's general tariff rate will rise from 25% to 35%, but about 94% of its exports remain unaffected under USMCA protections.

Automotive exports meeting USMCA rules stay tariff-free, though Canadian autos, steel, and aluminum still face separate sector-specific duties.

Unlike Canada, the US and Mexico have extended the USMCA tariff pause by 90 days, delaying a planned 30% US tariff on compliant Mexican imports.

The move, following a call between Presidents Trump and Sheinbaum, avoids immediate cost hikes for USMCA-compliant automotive goods but leaves the same sector-specific duties, as Canada, on steel, aluminum, and copper in place.

Non-compliant imports remain subject to a 25% tariff. The extension avoids immediate disruption, but US-bound vehicles and parts still face significant cost pressure.

The US will cut tariffs on South Korean vehicles from 25% to 15%, easing cost pressure on Hyundai, Kia, and others. The move bolsters South Korea's auto exports and reinforces US-Korea trade ties amid supply chain strains.

Finally, the new US-EU trade deal also drops tariffs on European auto exports to the US from 27.5% to 15%, avoiding a steeper 30% rate but still imposing high costs on EU automakers.

Industry groups like VDA and ACEA welcomed the stability but warned the new rate could cost German OEMs billions annually.

Porsche, Mercedes, BMW, and Volkswagen face the most significant impact, while Stellantis sees limited exposure.

Currency swings and tight margins may push automakers to rethink where they build.