Trump tariffs: Sona sees short term pain, explores alternatives to cut Chinese imports
HighlightsSona BLW remains optimistic despite US tariffs, citing past resilience, strong order book, and robust financials. CEO predicts industry consolidation, with weaker players exiting and stronger firms like Sona gaining market share. Short-term impact acknowledged, with concerns over global auto demand and supply chain disruptions due to rare earth dependence on China. Sona enters humanoid robot components market, leveraging core strengths in gears, motors, sensors, and actuators.
Indian auto component suppliers have begun insisting that there is a silver lining in the dark clouds of tariffs imposed by US President Donald Trump, never mind the short term debilitating effects. Even the added complexity of China subsequently tightening the screws on its global exports of rare earths in the wake of Trump's actions has failed to dampen the cheer exuded by component makers such as
Sona BLW Precision Forgings
(
Sona Comstar
). The company's optimism is based on two factors: a) a been there, done that attitude, which is a result of a large order book and substantial growth after the Covid19 disruption b) hope that in the medium to long term, weaker global auto parts manufacturers may not survive the impending chaos whereas companies with strong balance sheets like
Sona
will be able to ride the trough of tariffs. But the short term worry remains.
Sona provides mission critical systems for electrified and non electrified powertrains to BEVs as well as
ICE vehicles
, in India and many markets across the world.
In the medium to long term, we expect many opportunities to emerge from this chaos (tariffs by the USA). We firmly believe that many weaker players may not survive this disruption.Vivek Vikram Singh
Vivek Vikram Singh
, MD and Group CEO, said after the Q4 FY25 results that 'in the medium to long term, we expect many opportunities to emerge from this chaos (tariffs by the USA). We firmly believe that many weaker players may not survive this disruption. This should lead to further consolidation in the hands of companies with strong technology moves. Indian companies like ours that can provide world-class product performance and quality and have robust margins and healthy cash balances should emerge from this period much stronger than before. We have had this kind of disruption in COVID times also and we enjoyed a period of very high growth and a lot of order book additions, even in that time. And there is this ability, I think, we have as a company that when Brownian motion or random motion increases, we tend to benefit far more than our peers.'
Read more:
Sona BLW Q4 net profit rises 10% to ₹164 crore despite revenue dip
But short term pain cannot be gainsaid. Singh said the tariffs will adversely impact the demand for cars and light trucks and since Sona is a supplier to automakers globally, 'we may not be, we in fact are not immune to the demand and supply disruptions. But if you can look beyond the short term, I think there is also a lot of opportunity. Second, global automotive production, and this I include every market, may see disruptions due to supply chain complexities and high dependence on China, especially for rare earth materials.'
In the case of Sona, imports from China include magnets and Singh said the company was working with the Indian government and the Chinese embassy to speed up magnet imports. It is also searching for alternatives to the Chinese magnets. 'We are also evaluating alternate materials including ferrite, different grades of magnets, different technologies as well as different supply sources. So to sum up in a fairly confusing and uncertain time, we believe this trade war to be disruptive and adverse in the short term for the entire global auto industry,' he said.
We are also evaluating alternate materials including ferrite, different grades of magnets, different technologies as well as different supply sources. So to sum up in a fairly confusing and uncertain time, we believe this trade war to be disruptive and adverse in the short term for the entire global auto industry.Vivek Vikram Singh
In a recent comment on the impact of
Trump tariffs
on Indian auto component makers, ICRA had estimated anywhere between Rs 2,700 crore to Rs 4,500 crore on the component OEMs' earnings after the imposition of steep US tariffs on key automotive parts. The new levies include 25% tariff on engines, transmission, electrical components, and other auto parts. These tariffs may also moderate the overall auto component industry's revenue growth to 6-8% in the current fiscal, which is a downward revision from an earlier projection of 8-10%.
Humanoid robots
Predicting rapid adoption of 'Humanoid Robots' in the market over the next decade, Sona has meanwhile decided to become a supplier of materials for these robots. 'These robots have potential applications in a lot of industries, services as well as households. Like all other mobility segments, motors, drives, gears and reducers constitute more than 50% of the bill of materials for humanoids…So we'll be leveraging our core capabilities to develop components for humanoid robots,' Singh said.
Sona believes that these robots will have industrial, logistics and commercial applications and even in households, they will be playing a 'dominant' role in the future. And thus, it is important for the company not to miss this mega trend. 'Sona comes with its strong capabilities in gears, sensors, motors, controllers, embedded hardware and software is uniquely positioned to ride this wave. At the heart of these humanoids are actuators, which control practically all aspects of motion, linear and rotary. They also contribute to over 50% of the 35,000 to 50,000 dollar bill of material cost. We have begun exploratory work in components and systems that will get us into this field faster,' another company official said.
Sona will leverage existing capabilities across driveline, motor, and sensor divisions to offer integrated products like rotary linear actuators and vision systems.
Read more:
Sona-Comstar, IIT Delhi Innovation Program for Smart, Safe and Clean Mobility
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