“We’ve had a series of black-swan events,“ Kotagiri said. “Our industry really prospers with certainty and cadence and stability. And that’s what’s been missing in the last four years.”
But Kotagiri and other leaders of auto companies are now facing an upended industry. President Donald Trump's 25% tariffs on foreign auto imports announced at the end of March are expected to raise consumer prices, reduce demand and hit job growth. Magna, with more than 170,000 employees across 28 countries, dwarfs most of its large customers, including the likes of Ford, General Motors and Toyota.
'FLEXIBILITY IS KEY'
“The world changed,“ Kotagiri said. “Flexibility is key. We need to have the footprint, the capacity and the expertise to help.”
“If you talk to small and mid-sized suppliers that support, like a Magna, I mean, talk about panic,“ said Laurie Harbour, whose team focuses on automotive suppliers at advisory firm Wipfli. “Their cost has gone up so much and the revenues are still so soft,“ she said, adding that it is “putting pressure on their viability as a business.”
There may be more demand for Magna's U.S. business as automakers expand production stateside to avoid tariffs. Last month, Hyundai announced a $21 billion investment in the United States, and supplier Lear said it could expand as well. On the other hand, S&P Global Mobility estimates that the rising cost of autos could sap U.S. sales, cutting annual vehicle deliveries by more than 1 million from its current 16 million.
For new growth, Magna is looking in the same direction as many others - China, the world’s largest car market. Magna’s China business accounted for 13% of the company’s overall revenue, where it has 69 manufacturing facilities that employ more than 30,000 people When Chinese businesses “start thinking of either exports or coming to Europe or other parts of the world, we believe we have the seat at the table,“ Kotagiri said.
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