Forvia has already mitigated about 50% of its estimated exposure to US tariffs and is on track to offset the entire amount, the French auto parts maker's CEO Martin Fischer said Thursday in a call with reporters.
The company, which exports products manufactured in its Mexican plants to the US, has been impacted since March by President Donald Trump's imposition of 25% tariffs on imports from Mexico.
A supplier to Stellantis, Volkswagen, and Ford, Forvia is seeking to reduce the impact of these measures by implementing pass-through mechanisms with its customers, renegotiating with its suppliers, and reorganizing its supply chain.
"We have activated pass-through and negotiation clauses with our customers, we are optimizing our supply chain, maximizing the utilization of our US plants and making costs more flexible in all affected plants," said CFO Olivier Durand.
To cope with market volatility, Forvia also plans to reduce its investments, with a target of cutting capital expenditure and development spending by more than €100m in 2025 compared with the previous year.
The company will also reduce its fixed costs by freezing global hiring, ending temporary contracts, limiting business travel, and reducing marketing expenses, including canceling its participation in the CES and IAA trade shows.
Durand added that Forvia, which plans to divest non-strategic assets by the end of 2026, has attracted interest mainly from non-European players.
In Q1 2025, Forvia's sales rose 2.6% to €6.7bn, outpacing global automotive market growth according to S&P Global Mobility forecasts published earlier this month. This outperformance is attributed in particular to the seating and electronics businesses in Europe. In China, sales rose 4.6% to €1.3bn.
However, analyst Adrien Brasey of AlphaValue explains, "We expect the trade war to start having a more significant impact on production from the second quarter onwards. Some equipment manufacturers have already started to reduce production in Mexico and Canada towards the end of the first quarter. Combined with ongoing macroeconomic uncertainty, we believe this could further weigh on demand and production volumes, which will significantly impact Forvia."
"Even though there is an overall underperformance in China, this is accompanied by continued growth in our business with local manufacturers, particularly BYD, and the ramp-up of our collaboration with Chery," Durand said.
Adrien Brasey remains more skeptical about these figures: "This confirms one of our main concerns: Forvia's overexposure to Europe and its dependence on Western equipment manufacturers in China. In Q1, Forvia underperformed in China by 890 basis points (compared with an outperformance of 1,140 basis points in Europe and a slight underperformance of 30 basis points in the Americas). While the group has reiterated its goal of outperforming the Chinese market in 2025, we remain cautious. Management expects this outperformance to begin in H2 2025."
