Greetings from London!

Ever wondered what impact President Donald Trump’s tariffs could have on the hometown of an overseas automaker reliant on the U.S. market for much of its sales?

Well, my Reuters colleagues Tamiyuki Kihara and Tom Bateman have done just that, with a look at Hiroshima, Mazda’s hometown. You can read all about it here.

Mazda is heavily exposed to U.S. tariffs and saw U.S. sales fall 18.6% in May on the year and 6.5% in June. That has suppliers in Hiroshima – and there are an estimated 2,000 auto suppliers in the city - not to mention small ancillary businesses worried about the future.

Because of the tariffs Mazda, which has assembly plants in Hiroshima, has declined to give a full-year earnings outlook. And Mazda could lose U.S. market share to bigger rivals better able to absorb the cost of border taxes.

In Hiroshima, that means no overtime or business trips for Mazda employees and less drinking in Koji Sasaki’s bar close to the automaker’s headquarters.

Which brings us to today’s Auto File…

Like other Chinese automakers that have come to Europe, BYD had said it wanted to build cars here before the European Union said it would impose tariffs on EVs made in China – though border taxes no doubt helped focus their thinking.

So it was with great fanfare that BYD announced in 2023 it would build a car plant in Hungary, home of China’s friendliest leader in the EU, Viktor Orban.

But China’s No. 1 automaker is also building a car assembly plant in Turkey and sources tell Reuters that BYD is dialling back its production plans for Hungary while simultaneously beefing up its Turkish output expectations.

You can read all about it here.

The reason is Turkey is cheaper than Hungary, especially labour costs, while also able to send cars to Europe tariff-free.

And to be honest, if your strategy is to sell fully stacked cars in Europe at a slightly lower price than European competitors but still make a – and that’s BYD’s strategy – then Turkey makes sense.

Turkey already serves as a low-cost manufacturing hub for Toyota, Stellantis Ford, Hyundai and Renault.

So why not BYD too?

Fiat 500 hybrid to Stellantis' rescue. REUTERS/Giulio Piovaccari

It became evident quickly last year when Stellantis ‘fessed up to its inventory problems in North America that this was not going to be a quick fix.

It’s just a few weeks since Antonio Filosa took over as CEO of the world’s No. 4 automaker and the company took the decision Monday to bite the bullet and show investors how bad things are – with a first-half loss and 3.3 billion euro charge, part of which is to cover investments in vehicles Americans and Europeans want to buy.

You can read a story about it by my Reuters colleagues Giulio Piovaccari and Valentina Za here.

The company also said U.S. tariffs cost Stellantis 300 million euros in the first half, with up to 1.5 billion euros more possible in the second half of 2025.

CFO Doug Ostermann gave a workman-like performance on an investor call that gave the impression of an outfit rolling up its sleeves and starting to dig out of its self-inflicted mess.

But it’s clear things won’t be easy for Stellantis in the short term.

Avtovaz's struggles mean fewer Ladas off the line - REUTERS/Gleb Stolyarov 

Russia's largest carmaker Avtovaz is not having an easy time of it. 

As Reuters colleagues Gleb Stolyarov and Alexander Marrow report, high interest rates and competition from China squeeze have been squeezing Avtovaz’s sales.

You can read about it here.

The company now says it may shorten its working week to four from five days, a rare move from a major state-owned employer.

Avtovaz said last month it expects sales across Russia's car market to shrink by 25% this year and has blamed high interest rates as a major issue.

Russia's domestic production had relied heavily on foreign producers and the market slumped in 2022 - after Moscow's invasion of Ukraine - before the rapid arrival of Chinese carmakers helped revive the sector.

But Chinese rivals now account for more than 50% of sales in Russia, up from less than 10% before the war started, which is now hurting Avtovaz.

Volvo is one of Europe’s most exposed automakers to Trump’s tariffs and has been left scrambling to reduce that exposure as quickly as it can.

As Reuters colleague Marie Mannes reports, that includes scaling back its U.S. model lineup this year tariffs have made it harder to sell a broad range of vehicles profitably.

You can read more about it here.

The Chinese-owned Swedish automaker is also working to produce popular models like its XC60 mid-size SUV, which will be made at its plant in South Carolina from late 2026.

Meanwhile, Volvo posted a sharp decline in second-quarter operating profit – albeit above analyst expectations – because of headwinds from tariffs and softening demand.

Facing that uphill climb, in an interview with Reuters Volvo CEO Hakan Samuelsson urged the EU to cut its 10% tariff on American-made cars, arguing that Europe’s automakers need no protection from U.S. competitors.

General Motors' second-quarter core profit fell 32% to $3 billion as the No. 1 U.S. automaker continued to struggle with Trump’s tariff, which it said cut profits by $1.1 billion.

Raj Jegannathan, a senior executive with a wide purview including several IT and data functions is now running Tesla's sales team as the EV maker grapples with a global drop in sales.

Chinese EV brands Neta and Zeekr inflated sales in recent years to hit aggressive targets, with Neta doing so for more than 60,000 cars, Reuters reported. Zeekr subsequently denied doing so.

A senior Chinese official called on major automakers to push for "