Continental Flags Q1 Slowdown on Customs and Tariff Fears

German auto parts giant Continental AG has warned that North American light vehicle production will decline by 7% in Q1. The company blames economic instability and customs-related uncertainty.

Upcoming U.S. import tariffs on cars, taking effect April 3, are adding strain to the industry’s planning and output.

Customs Tariffs Cloud Automotive Market Forecasts

Continental cited the “current customs situation” and delayed product rollouts as key factors disrupting supply chain clarity and production forecasts.

“High levels of uncertainty” are impairing strategic planning, the company told investors during a pre-earnings call.

Earnings Margins Under Pressure Amid Customs Shake-Up

In its automotive division, Continental expects EBIT margins to break even in Q1. The division, which generates the bulk of group revenue, is battling margin pressure caused by customs duties and broader market instability.

Still, some relief may come from ongoing cost-cutting initiatives launched earlier this year.

U.S. Tariffs on Cars Set to Reshape Global Trade Routes

President Donald Trump is expected to announce broader customs measures and duties Wednesday, further escalating tensions in the global auto sector.

The U.S. auto import tariffs follow months of political pressure to prioritize domestic production and reduce foreign dependency.

Positive Signs in China, Despite Global Customs Tensions

Continental offered a brighter outlook for its Chinese operations. Q1 light vehicle production in China is forecast to rise by a mid-to-high single-digit percentage—better than previous projections.

This contrasts sharply with customs-related challenges affecting U.S. and European markets.

Customs-Driven Headwinds Could Impact Q2 Forecasts

With Q1 margins expected to remain flat and U.S. customs uncertainty mounting, analysts are cautious about Continental’s performance through mid-2025.

The auto industry as a whole is bracing for further disruption depending on the scope of new tariffs and related regulations.

Customs Policy Emerges as Key Auto Sector Risk

As customs and tariff policies evolve rapidly under Trump’s administration, global auto players like Continental face an increasingly unpredictable landscape.

Clarity on long-term trade rules will be crucial for stabilizing production, margins, and investor confidence.