The auto industry is used to weathering crises—from the Great Recession to the microchip shortage in the early days of the coronavirus pandemic.
But the emerging global trade war is a different beast. Amid ever-changing trade policy moves by the Trump administration, the industry is clamoring for clear and consistent policy.
That was the message Swamy Kotagiri, CEO of Canadian auto parts supplier Magna, emphasized during a recent Automotive Press Association event at Magna’s US headquarters in Michigan.
“Getting certainty is the answer. Whatever that is, it doesn’t matter,” Kotagiri told Tech Brew. “I’m not here to opine on what’s good from a policymaking perspective.”
Control: Magna is the largest auto supplier in North America; it employs 170,000 people globally and has hundreds of facilities across 28 countries. It has more than 10,000 employees in Michigan alone. The manufacturer makes pretty much every type of vehicle component, from electrical parts to powertrain systems.
Now, it’s helping its customers navigate tariffs that include a 25% duty on all imported vehicles. Tariffs on imported car parts could take effect next month. Industry analysts have warned that the tariffs are likely to drive up prices, disrupt production, and depress sales.
“I always talk about controlling the controllable. I can’t change their viewpoint, and I can’t change their mind. We can give them data. We can show them what it means. And if that is the policy, what choice do we have, as an industry?” Kotagiri said. “The rest is personal opinion.”
Under pressure: Underscoring the cost pressures the auto industry already faced before the tariffs, Kotagiri cited figures estimating that automakers’ spending on R&D and capital expenditures has grown 40%, from $140 billion in 2015 to $200 billion in 2024. At the same time, global sales volumes have remained relatively flat and market share has become more fragmented as new players have entered the market.
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“The industry is amortizing increased spending over a smaller number of units,” he said during remarks at the event.
He emphasized the need for automakers to be willing to form alliances to spread out investments and risk. He also noted that Magna is working closely with its customers to manage the impacts of the tariffs, even though it’s largely the automakers, not their suppliers, that bear the costs. The entire industry suffers if the car manufacturers have to reduce production (which some already have), he said.
A recent analysis by the Center for Automotive Research estimated that, as a result of the tariffs, US automakers will face $107.7 billion in increased cost. The three Detroit automakers (General Motors, Ford, and Stellantis) alone would see increased costs of nearly $42 billion.
Looking forward: Kotagiri emphasized the importance, in his view, of not being reactive, and not letting past practices guide decisions about a future that looks very different.
But Magna and other auto industry players are applying what they learned from the 2008–2009 economic downturn and from the chip shortage. Kotagiri pointed to lessons such as the need for financial discipline, being transparent with customers, and devising new ways to plan for supply-chain challenges to avoid constant production disruptions.
“Uncertainty keeps me up at night. But usually a crisis never goes to waste if you act on it. We have a healthy balance sheet. We have good relationships with the customers. We have a very talented, dedicated workforce,” Kotagiri told us. “I think there’s going to be distress in the market. So how can we make use of that opportunity to get more work?”