TOKYO/MILAN, May 31 (Reuters) - Shares of global automakers and suppliers tumbled on Friday after U.S. President Donald Trump threatened to impose tariffs on imports from Mexico, potentially upending a global manufacturing business model established decades ago. From Mazda Motor Corp in Japan to Volkswagen AG in Germany to General Motors Co in the United States, carmaker stocks took a hit as a new front opened in the global trade war. Automakers and suppliers could try to pass along tariff costs to consumers. Swedish industrial seals and bearings maker SKF, which supplies carmakers in the United States from Mexico, said it would pass on any tariff impact to customers.. Janet Lewis, an analyst at Macquarie Securities. However, other analysts said tough competition and slowing demand for vehicles would likely force manufacturers to eat much of the added cost. That in turn could force more cost-cutting by auto sector manufacturers. Major trade groups that represent the Detroit Three automakers and global automakers with U.S. David Schwietert, interim head of the Alliance of Automobile Manufacturers said in a statement that called tariffs a tax on consumers.
Auto trade groups also expressed concern that a tariff war with Mexico would undermine efforts to win congressional approval for a new U.S., Canada and Mexico trade agreement negotiated by the Trump administration. Automakers shipped 2.52 million vehicles to the United States from Mexico in 2018, accounting for about 14.6% of total U.S. IHS Markit, a consulting and market research firm. Railing against a surge of illegal immigrants across the U.S. Trump said he would target all goods coming from Mexico with a 5% tariff from June 10, increasing monthly to 25% by Oct. 1, unless Mexico took immediate action. Trump wrote in a tweet on Friday. Auto industry executives have said it would cost billions to abandon factories in Mexico and build replacements in the United States. For years carmakers and auto parts makers have built vehicles and parts in Mexico, taking advantage of its cheap labor, trade deals and proximity to the United States, the world's second largest auto market after China.
Mexico now dominates production of certain key automotive components, such as wiring harnesses - the networks of cables that connect on-board computers, brakes, headlights and other electrical systems. Mexico produces 97% of the wiring harnesses used in North American made vehicles, said Peter Nagle, senior automotive economist at IHS Markit. Trump's threat to impose tariffs rattled a number of global companies and industries. In addition to the auto sector, aerospace suppliers, industrial component makers and electronics firms are vulnerable. Jon Harrison, a senior macro strategist at TS Lombard. 32.5 billion in auto parts flowed to the U.S. Mexican factories, according to U.S. Some of the most popular vehicles sold in the United States are made in Mexico, including versions of GM's Chevrolet Silverado pickup, the Chevrolet Blazer SUV, Volkswagen's Jetta sedan and Toyota Motor Corp's Tacoma pickup. Trump's tweet ignited a global sell-off in shares of major auto industry players. In Europe, potential merger candidates Fiat Chrysler Automobiles NV and Renault SA led the carmakers lower, each falling 5%, while automotive supplier Faurecia SE was down 4% in late afternoon trading. In Friday afternoon U.S. GM, Ford and big auto parts makers Delphi Technologies PLC, Aptiv PLC and seat maker Adient PLC all tumbled.
Rear discs are also larger than a standard Jetta at 11.8-inches. The set up takes an impressive amount of abuse. Volkswagen flung us at the infamous Tail of the Dragon with its 318 turns in 11 miles. This road is a brake system鈥檚 worst nightmare, with serious grades, plenty of speed, and tight radii. At no point did the brakes fade. The multi-link rear suspension is back. The Jetta rides on Volkswagen鈥檚 MQB architecture, which means it was made to accept both torsion beam and mulit-link suspension designs. While the standard Jetta uses the former, the company turned to the latter for the GLI. Engineers robbed the GTI toy box for parts, and the two share spring rates and front sway bars, though the GLI gets its own specific rear bar that鈥檚 1.7 mm smaller in diameter. Volkswagen鈥檚 building 3,500 35th Anniversary Edition versions of the GLI, and those cars get the company鈥檚 swank DCC adaptive damping system. It鈥檚 great, but so are the standard struts and shocks. Both suspensions are softer than you鈥檇 imagine, but are happy to hustle when you grab the car by the scruff.
Volkswagen says that even more so than the GTI, the GLI is made to be a performance-oriented daily driver, and that means it needs to get you down the road without jouncing your internal organs from their homes. It is effectively a GTI sedan. The theme here is take everything we love about the GTI and shove it into the Jetta. The two cars weigh about the same and share a laundry list of parts, including a brilliant turbocharged 2.0-liter four-cylinder. It鈥檚 good for 228 horsepower, about 18 more than the outgoing GLI, and 258 lb-ft of torque. The old engine made do with 207. That means the car is properly quick. We don鈥檛 have official numbers just yet, but our guess is the GLI will stick close to the GTI鈥檚 6.0-second 0-60 time. As usual, the torque is the star, giving the car more muscle across a broader swath of the rev range.
