Mazda can’t “swallow” the tariffs it will face under Pres. Donald Trump’s new trade sanctions. While plans have yet to be finalized, it is likely to spread tariffs costs out in a way that will minimize the impact on “price-sensitive” products, such as its entry line, the CX-30, global CFO Jeff Guyton said. Even then, the automaker expects to take a big hit to sales, he forecast. Here’s more of the details.
Mazda CFO Jeff Guyton this week presented to his board what he called “Plan A and Plan B” to address the Trump tariffs.
Carmakers from around the world are struggling to come up with ways to respond to the hefty new tariffs on imported autos and auto parts announced by Pres. Donald Trump last week. While some plan to absorb the added costs, others will simply make clear to customers why prices for their new vehicles have gone up.
Mazda is still working out a final plan, CFO Jeff Guyton told Headlight.News during a visit to Mazda’s headquarters in Hiroshima, Japan Tuesday. But the executive gave a sense of what was in the “Plan A and Plan B” strategies he gave to the company’s board this week. In either case, Mazda is likely to pass on at least some of the costs of the tariffs to consumers. In turn, Guyton said it seems certain that Mazda, like the rest of the industry, will face lower sales this year.
With the U.S. being Mazda’s “number one market, we take this quite seriously,” Guyton said.
“Too big to swallow”
Like its competitors, Mazda has to decide whether to absorb or pass on tariffs, but Guyton says they’re “too big to swallow” whole.
The Trump administration has yet to finalize all the details of its new tariff policy. And automakers will then have to figure out how to calculate what they owe – which will require them to consider costs on everything down to the smallest nuts and bolts.
industry analysts anticipating the typical new vehicle will face tariffs of anywhere from $3,000 to $20,000 — or more – Guyton said that is “too big to swallow,” unlike a few larger mainstream brands, such as Hyundai and Kia.
Mazda, the executive said, also has to take into account the impact the tariffs will have on its suppliers and dealers – and then what higher costs would mean to its customers.
“Everything is on the table”
In 2023, Mazda opened a new U.S. plant in partnership with Toyota.
By a stroke of good fortune, Mazda began producing vehicles in the U.S. again late in 2023 at a plant it built as part of a joint venture with Toyota. The factory was originally meant to serve as a supply base for both U.S. and foreign markets, with about 20% of the Mazda-badged vehicles meant for export, a senior official told Headlight.News.
But things might have to change due to the imposition of the Trump tariffs. It could be used to provide more products for the U.S. to minimize the impact of those sanctions. Mazda is also looking at ways it might be able to reduce dependence upon imported parts, both at the Alabama and even its Japanese plants.
“Everything is on the table,” said Guyton, though he cautioned that Mazda isn’t likely to race to put up a new U.S. assembly plant.
Even if it did go with that option, it would be “very challenging” to get a new factory into production any time soon. Not only would it have to find a site, pull together the capital and get it built, it would “take a lot of time to get people trained and happy and (able to work) at line speed.”
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Watching the competition
Mazda is looking at a variety of tariff solutions, said CFO Jeff Guyton.
“We haven’t made any firm decisions,” on how Mazda will handle tariff. There is the possibility Mazda might yet try absorb the costs under the various strategies Guyton has presented to the board. The final decision will dependent on “what happens in the marketplace,” his company watching closely what competitors will do.
Some manufacturers plan simply to pass tariffs costs onto buyers, Volkswagen opting for what it called “transparency,” listing the penalty on its Munroney window sticker. Others, including Hyundai, Kia and Toyota, have indicated they will hold to current prices – though for how long isn’t clear. Hyundai’s “Customer Advantage” program is scheduled to run only through June 2. The timing suggests it is counting on having enough inventory of products imported before tariffs went into effect on April 2 to minimize its financial penalty.
Longer term, said Guyton, “I think everybody will have to pass on at least some costs.”
Minimizing the pain
In Mazda’s case, he added, the company “has to stay competitive” in various product segments, especially in ones that are particularly “price-sensitive.” As a result, it might distribute tariff costs in a way to minimize the pain for buyers of entry-level products, such as the CX-30, according to Guyton.
In the end, whatever product, “We have to provide a product and experience where people say they’re willing to pay for that.”
The problem, the Mazda veteran said, is that “Clearly the industry will be smaller this year than last.”
How much smaller is the big question. U.S. new vehicle sales nipped 16 million in 2024, the industry’s best figure since before COVID – though well below the 17.1 million vehicles sold in 2016, an industry record. A new study by Telemetry Research estimated that after a strong start, tariffs will deflate demand, 2025 sales likely to fall to 14.2 million for the full year, a roughly 1.8 million vehicle shortfall.
“I don’t think that’s an unreasonable estimate,” said Guyton.
Bye bye, MX-5! You’re now going to be as rare as hen’s teeth on US dealer lots. ND3 is now the end of the line.
Customers shouldn’t have to pay tariffs on vehicles that are already in their inventory. I hope dealerships aren’t going to play price games with the vehicles delivered prior to tariffs being implemented.