Car parts makers in Japan, South Korea rattled by US tariffs

Small businesses likely to face lower sales and profits as demand for components falls

- Walter Sim Japan Correspondent and Wendy Teo South Korea Correspondent

TOKYO/SEOUL - They are not household names, but the nuts and bolts they manufacture are used in vehicles bearing the logos of Japan's Toyota, South Korea's Hyundai and America's General Motors (GM).

These businesses, many of which are small and medium-sized enterprises (SMEs) in the industrial heartland of Japan and South Korea, are invisible to car buyers but crucial in firing up the engines of the auto industries.

However, without the wherewithal of their big-name clients to weather the storm, they are expected to be hard-hit by American tariffs. Levies of 25 per cent on cars kicked in on April 3, with similar duties on car parts to follow by May 3.

Most major carmakers like Toyota, Honda and Hyundai have said they will leave sticker prices of their US-sold vehicles unchanged for now, even as some smaller players like Subaru have warned that they "cannot guarantee" current pricing.

Still, global car industry supply chains are highly integrated, complex and reliant on companies like Benda Kogyo, which was founded in 1964 in Kure in Japan's Hiroshima prefecture. It has 142 employees in Japan and another 1,026 staff at its subsidiaries, including in China and South Korea.

It is the world leader in the manufacture of metal rings used in car components such as gears and pistons, with customers including Honda, Nissan, Hyundai and GM.

Its president Kazunari Yashiro told The Straits Times that direct exports to the US accounted for 11.7 per cent of the company's overall consolidated sales in 2024.

It also sells to GM's factory in South Korea, from where 419,000 vehicles were shipped to the US in 2024, accounting for 84.8 per cent of total production.

Mr Yashiro feared two potential medium- to long-term scenarios as US importers are saddled with the tariffs. For one, they may pass on costs to car buyers, which may dampen sales and, in turn, reduce demand for components from suppliers like his company.