Finance
Posted By Global Banking and Finance Review
Posted on February 28, 2025
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By Nathan Vifflin and Mathias de Rozario
(Reuters) -French car parts supplier Forvia is drafting an action plan on how to deal with the impact of U.S. tariffs on its Mexican operations, and plans to pass on costs to customers, it said on Friday.
Forvia joins peer Valeo in saying car part suppliers cannot bear the burden of tariffs alone as the automotive sector grapples with a persistent downturn in car production.
"We have defined what will be necessary for the entire impact to be passed on to our clients and suppliers. Because we can't do otherwise," Forvia's Chief Financial Officer Olivier Durand told a news conference.
Shares in the group had slid 18.6% by 0822 GMT to the bottom of France's SBF120 index, on track for its largest daily drop ever.
U.S. President Donald Trump said 25% tariffs on all goods coming into the U.S. from Mexico and Canada will go into effect on March 4.
As Forvia's supply chain is regionally integrated, with goods manufactured in its Mexican plants for export to the U.S, it would not be affected by any further tariffs on imports coming from outside North America, Durand said.
Forvia also said it sees 2025 sales at around last year's level, reflecting a downturn in European and North American automotive demand dragging into the new year.
The company said it anticipates a sales drop in the contracting European and North American markets, but sees growth in South America and China.
Forvia has been seeking to ally with more Chinese automakers to offset the sales slump faced by its Western customers such as Ford, Stellantis and Volkswagen.
Durand said the company was now the fifth-largest automotive equipment supplier in China.
Forvia said in its annual earnings report that it sees sales between 26.3 billion euros and 27.5 billion euros ($27.32 billion-$28.56 billion) in 2025, compared with the 26.97 billion euros it reported for 2024.
The 2025 guidance is likely to be seen as more cautious, while the results for 2024 came in mixed, said Michael Foundoukidis, an analyst at ODDO BHF.
The outlook is based on estimated worldwide automotive production of 89.5 million vehicles this year, Forvia said, and takes into account U.S. tariffs that are already enforced.
Analysts polled by LSEG were expecting 27.74 billion euros in sales in 2025.
($1 = 0.9628 euros)
(Reporting by Nathan Vifflin and Mathias de Rozario; Editing by Christopher Cushing and Jan Harvey)
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