Important points
Nissan has relied on “dual sourcing” of parts and local supply chains as it adapts to U.S. tariffs, the company’s chief financial officer told CNBC. The Trump administration imposed a 25% tariff on foreign car imports in April, causing some of the world’s biggest auto stocks to plummet. In response, automakers considered raising prices, introducing import fees, suspending production, and even cutting jobs. Nissan Chief Financial Officer Jeremy Papin told CNBC’s “European Early Edition” that the company “is not immune to this impact.” “This is a significant headwind for all importers into the United States,” he added. In response, he said, Nissan shifted its strategy and relied on local supply chains and “dual sourcing,” or sourcing the same parts from multiple suppliers. “We have made a number of adjustments, including increasing local production as quickly as possible. We have also utilized dual sourcing for some key models,” Papin said. “We are always looking at capacity available in North America as well as further localization opportunities,” he added. The company has production capacity in its U.S. factories, he added, and “we’re always looking for opportunities for further localization.”Papin also said the potential “nightmare” that the AI craze would cause a shortage of critical chips is not as bad as initially thought. “That’s a fraction of the expected risk.” “So we definitely have widespread optimism that it’s not going to be a nightmare scenario that could happen,” he added. Semiconductor maker Nexperia is subject to export restrictions because its products are sent to China for assembly and testing and then re-exported to customers in Europe and other regions. As a result, technology transfer tensions between the United States and China are increasing, threatening global supply chains. However, Beijing and Washington reached an agreement in November, with the former agreeing to exempt Nexperia. “It’s clear that the U.S. made the right decision in terms of promoting chip exports, and we are working to address that and find alternative sources where possible,” Papan said, adding, “Nissan is taking off shifts and having non-production days,” referring to manufacturing suspensions the company has implemented during supply. In the Chinese market, Nissan is giving local teams autonomy and working to “make the cars that Chinese customers want really fast,” Papan said, aiming to shorten the time it takes to bring a new model to market to two years, which is twice as fast as Nissan’s stock price has fallen 21% since the beginning of the year.
