Discussion on WardsAuto Podcast: Exploring Tariff Developments and Enhancing Quality Control through Expertise in SkillReal
The automotive industry is facing significant changes and discussions due to the impact of tariffs, with companies like General Motors (GM), Stellantis, and Mitsubishi considering or planning investments and potential plant re-openings to mitigate tariff costs and maintain competitiveness.
General Motors is responding to the tariff burden by investing heavily in domestic production. The company announced a $4 billion investment to increase U.S. production capacity, primarily driven by the complexity and cost of tariffs on imported vehicles and parts. These tariffs are expected to impact GM’s profitability by $4 to $5 billion in 2025 alone.
Stellantis, which owns brands like Jeep and Chrysler, is also likely to be affected by tariffs, though specific investment details were not highlighted. Given the industry-wide impact of tariffs, Stellantis faces similar pressures to adjust production locations or supply chains to avoid added costs.
Mitsubishi, as a foreign automaker, must weigh building or expanding production locally versus absorbing tariff costs. While exact moves weren't specified, industry trends show automakers considering new or reopened U.S. plants to offset tariff costs and maintain market share.
Tariffs of 25% on imported cars and parts, imposed in 2025, are raising costs for automakers, who are hesitant to raise vehicle prices aggressively due to competitive market pressures. Instead, companies are exploring strategies to shift production domestically, optimize supply chains, or absorb shocks, acknowledging that moving production is a multi-year, costly process.
The administration supports domestic production expansion and job creation, encouraging automakers to move production back to the U.S. However, experts note that vehicle manufacturing cannot be relocated quickly or cheaply since it requires large investments and considerable time.
Meanwhile, the automotive industry is also navigating the growing trend of replacing humans with AI and software systems in quality control. This displacement is not necessarily a negative development, according to a conversation between David Kiley and Peter Grabowski, COO of SkillReal, a company that specializes in providing solutions for automakers and parts makers. The conversation will discuss the benefits of replacing humans with AI and software systems in quality control.
SkillReal is gaining more customers from automakers and parts makers as they seek efficient and cost-effective solutions in the face of industry challenges.
In a bid to further offset tariff costs, Mitsubishi may collaborate with Nissan to facilitate a potential production shift back to the U.S. Nissan's U.S. plants have available capacity that could be utilized for potential production increases.
The UAW is urging Detroit Three automakers, specifically Stellantis and General Motors, to restart production in underutilized U.S. plants. The automotive industry is facing challenges in balancing profits and market share amidst tariffs, and the UAW's demands add to the pressure for change.
Suppliers in the automotive industry are hoping that automakers will prioritize sales volume and market share over profits as they deal with tariffs. This approach could help maintain the industry's momentum and competitiveness in a rapidly evolving landscape.
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