INEOS Automotive CEO on navigating evolving tariff landscape

00:00 Speaker A

Back in April, UK-based Ineos Automotive said it would be capping tariff price increases at 5% on its vehicles, calling on politicians for urgent and direct political intervention on tariffs. In 2024, the company sold a majority of its vehicles in the US, and is aiming for 50% growth in sales this year. Now the US and EU negotiators are narrowing in on a potential trade deal that could see imports, including autos, tariffed at 15%. For more on how the automaker is planning for growth amid that tariff and trade uncertainty, let’s bring in Lynn Calder, Ineos Automotive CEO. Also with us, Yahoo Finance senior auto reporter, Pras Subramanian. Thanks to you both for being here. So, Lynn, let’s talk tariffs a little bit first, and then let’s dig into the growth scenario. You all, and we should mention you all are a higher-end luxury automaker here, so that’s sort of the base case as we talk about what effect tariffs will have. But where are most of your vehicles made, and then how are you dealing with the tariff situation?

01:41 Lynn Calder

So we found ourselves right in the eye of the storm, Julie, because, whilst we’re a British company, and a complete British backstory and legacy to our brand, we are produced in France. So even once there was a tariff deal negotiated as between the UK and the US, that meant nothing for us. So we’re still now waiting very patiently for European politicians to announce a deal to help us with our factory in France exporting from there into the US where, as you say, it’s our biggest market.

02:42 Pras Subramanian

How are the US sort of consumers reacting? You mentioned that 5% cap rate on the price due to tariffs, which are a 25% sector tariff in the auto for autos, which is kind of a big deal for a car even that costs $80,000, $90,000, $100,000. How are they reacting to that and also the new Quartermaster that’s out too?

03:17 Lynn Calder

Yeah, so, I mean, first of all, like taking a step back, I mean, the US is reacting so well to our vehicle. It’s our biggest market. This is a country that’s really adopted our vehicle, which is really exciting for us. It just fits. It’s kind of, it’s a big truck, but it’s kind of a normal-sized car in the US, and people really, really like it. So that’s been really exciting for us. So the tariffs came in at a really unfortunate time, just as we were really starting to take off on a really great trajectory. I think the impact on our customer, obviously, we don’t want to put the price up at all. And look, if there’s a tariff deal, we’ll look at pricing again as well. But the Quartermaster is an interesting one. The Quartermaster, we’ve got a station wagon and a pickup truck Grenadier Quartermaster. The Quartermaster is also a European-made pickup truck that also attracts chicken tax. So we’re taking an absolute double whammy on this vehicle, which is a perfect car for the US market. So yeah, 50% tariff right now on the Quartermaster.

05:02 Speaker A

Wait, what’s a chicken tax?

05:04 Lynn Calder

So it’s a 1960s protectionist measure in the US, which covers multiple industries, obviously started with poultry, I think, but picks up pickup trucks. So in the kind of three-million-strong pickup truck market in the US, you know, they’re kind of really seeking to protect that.

05:54 Pras Subramanian

That is interesting. I did not, did not know that. We learned something today new. But so you mentioned the Quartermaster, of course, that pickup truck situation. Also, there’s going to be potential for new vehicles rounding out the portfolio. What can you tell us about them? Do you think there might be some, you know, possibly for electrification or hybridization?

06:40 Lynn Calder

Yeah, so sure, and look, you know, we’re starting with the Grenadier and Quartermaster, and despite kind of the tariff discussion, you know, the models are still going extremely well, and we’re really continuing our growth trajectory in the US because we really, really see our market as here. So that’s going great. But yeah, what’s next? Fusilier is our next model, which we did an exterior reveal last year, and that will come in electric, but most importantly for the US market, and for us as well because we’re not seeing electric vehicle take up at anything like the rate that the industry and regulators hoped and expected. We kind of thought that was going to happen, to be honest. We think we should be listening to what our customers want to drive. So most importantly, for Fusilier, we’ll be bringing a range extender, which is a hybrid.

08:02 Pras Subramanian

Right, kind of like that EREV technology. So in the US, it’s a very competitive SUV market. You’re going to start rounding out the portfolio soon. Hopefully, there’s a trade deal that’s signed soon for you guys, for the sake of European automakers. How do you compete in the world where you have the Cadillac Escalades, the G-Wagons, BMW offerings, who also is a partner for you guys? How do you compete against that really competitive sort of subset here?

08:56 Lynn Calder

I think it, I mean, it’s a really competitive market, and you know, nobody joins the automotive market or enters it with a faint heart because it’s a really tough business. But I think what we offer is something that is almost becoming unique in our market, and it’s the reason the Grenadier exists, which is in a world that is moving so far into tech, so far into the car doing everything for you, the car beeping every time you do something that it doesn’t really want you to do, we’ve kind of forgotten what it’s like to drive a car. And we’ve forgotten that that’s actually a really fun thing to do, you know. And with the Grenadier being an off-road car, 4×4, a big truck that can take you anywhere and kind of fuel your adventures, then I think that that sort of freedom, that possibility that it gives you is something that’s not really on the market anymore.

10:06 Speaker A

So no autonomy, I guess, coming down for you guys. Doesn’t sound like it. Lynn, thank you. Appreciate it. Pras, thank you very much.