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Found 15 results

  1. Yesterday, President Donald Trump announced a new round of tariffs on about $200 billion in Chinese goods beginning next Monday. The tariffs are set at 10 percent and could rise to 25 percent in January if the Chinese government refuses to offer concessions. Today, the Chinese government announced that it would take retaliatory action by placing tariffs on $60 billion of U.S. goods. This is bad news for automakers as the Detroit Free Reports that more than 100 car parts - ranging from tires to batteries - will be hit by the tariffs. Analysts told the paper the increased tariffs will raise prices and cause sales to fall, along with profits being cut for automakers. It's going to be felt by Americans and it's going to be a big deal. Tariffs are taxes on consumption. Eventually, costs will be passed down to the consumer. This will drive vehicle costs higher. It also includes a lot of body shop equipment," said Peter Nagle, senior analyst at IHS Markit. Analysts all agree that prices will go up, but aren't sure by how much. "Prices are going to go up, but they won't go up by 25 percent. It is most unfortunate that this is coming at a time when the auto cycle is in very late stage. Vehicle sales already are in slow decline. This will probably will be quite a gut punch when they are forced to raise prices," explained Jon Gabrielsen, a market economist who advises automakers and auto suppliers. "It covers literally everything that goes into the construction of an automobile, from the smallest components and material inputs like the cords in tires and shafts and gears and bearings all the way up to completed engines and, in some cases, chassis with engines mounted. Thing is, it takes about three years to source each product. It takes many years and possibly a decade to make that full move." Automakers didn't comment as to how they plan to absorb and pass the cost onto consumers. They did reiterate pleas for both governments to sit down and work this out. Source: Detroit Free Press, Bloomberg via Automotive News (Subscription Required) View full article
  2. Yesterday, President Donald Trump announced a new round of tariffs on about $200 billion in Chinese goods beginning next Monday. The tariffs are set at 10 percent and could rise to 25 percent in January if the Chinese government refuses to offer concessions. Today, the Chinese government announced that it would take retaliatory action by placing tariffs on $60 billion of U.S. goods. This is bad news for automakers as the Detroit Free Reports that more than 100 car parts - ranging from tires to batteries - will be hit by the tariffs. Analysts told the paper the increased tariffs will raise prices and cause sales to fall, along with profits being cut for automakers. It's going to be felt by Americans and it's going to be a big deal. Tariffs are taxes on consumption. Eventually, costs will be passed down to the consumer. This will drive vehicle costs higher. It also includes a lot of body shop equipment," said Peter Nagle, senior analyst at IHS Markit. Analysts all agree that prices will go up, but aren't sure by how much. "Prices are going to go up, but they won't go up by 25 percent. It is most unfortunate that this is coming at a time when the auto cycle is in very late stage. Vehicle sales already are in slow decline. This will probably will be quite a gut punch when they are forced to raise prices," explained Jon Gabrielsen, a market economist who advises automakers and auto suppliers. "It covers literally everything that goes into the construction of an automobile, from the smallest components and material inputs like the cords in tires and shafts and gears and bearings all the way up to completed engines and, in some cases, chassis with engines mounted. Thing is, it takes about three years to source each product. It takes many years and possibly a decade to make that full move." Automakers didn't comment as to how they plan to absorb and pass the cost onto consumers. They did reiterate pleas for both governments to sit down and work this out. Source: Detroit Free Press, Bloomberg via Automotive News (Subscription Required)
  3. Ford had planned on selling two cars by 2019 in the U.S. - the Mustang and Focus Active. The latter took elements of a crossover with a higher ride height, body cladding, and new bumpers, and put them onto a Focus hatchback. But plans to bring this model to the U.S. have been canned. Ford announced today that it has canceled the Focus Active as tariffs on Chinese-made goods would eat into profits. The company announced last year that it would import the next-generation Focus from China. "Given the negative financial impact of the new tariffs, we've decided not to import this vehicle from China. The significant thing that moved was the tariffs going up substantially higher. We're choosing to deploy resources elsewhere," said Kumar Galhotra, Ford president of North America. Unlike General Motors which had applied for an exemption on the Chinese-built Buick Envision, Ford did not apply for one as it would have not worked out due to production timing and a small number of sales - the company projected to sell fewer than 50,000 Focus Actives in the U.S. Kristin Dziczek, vice president of the Center for Automotive Research tells The Detroit News that this could be the first of many announcements. The combination of Chinese tariffs, along with the threat of a 25 percent tariff on imported cars and parts may push a lot of products out of the U.S. “Many models will be withdrawn from the U.S. market, and many won’t be built in the U.S. at all. There are a whole lot of implications for the automotive industry and for consumers in terms of choice and prices,” she explained. The decision also puts Ford in a tough spot. The Focus Active was going to be one of the models that would fill in the space left by sedans that are going to be cut. "It didn't make sense for us to continue to invest in this program. We're looking at the entire landscape, and we're thinking through what other products we can offer customers," said Galhotra. Source: Automotive News (Subscription Required), The Detroit News View full article
  4. Ford had planned on selling two cars by 2019 in the U.S. - the Mustang and Focus Active. The latter took elements of a crossover with a higher ride height, body cladding, and new bumpers, and put them onto a Focus hatchback. But plans to bring this model to the U.S. have been canned. Ford announced today that it has canceled the Focus Active as tariffs on Chinese-made goods would eat into profits. The company announced last year that it would import the next-generation Focus from China. "Given the negative financial impact of the new tariffs, we've decided not to import this vehicle from China. The significant thing that moved was the tariffs going up substantially higher. We're choosing to deploy resources elsewhere," said Kumar Galhotra, Ford president of North America. Unlike General Motors which had applied for an exemption on the Chinese-built Buick Envision, Ford did not apply for one as it would have not worked out due to production timing and a small number of sales - the company projected to sell fewer than 50,000 Focus Actives in the U.S. Kristin Dziczek, vice president of the Center for Automotive Research tells The Detroit News that this could be the first of many announcements. The combination of Chinese tariffs, along with the threat of a 25 percent tariff on imported cars and parts may push a lot of products out of the U.S. “Many models will be withdrawn from the U.S. market, and many won’t be built in the U.S. at all. There are a whole lot of implications for the automotive industry and for consumers in terms of choice and prices,” she explained. The decision also puts Ford in a tough spot. The Focus Active was going to be one of the models that would fill in the space left by sedans that are going to be cut. "It didn't make sense for us to continue to invest in this program. We're looking at the entire landscape, and we're thinking through what other products we can offer customers," said Galhotra. Source: Automotive News (Subscription Required), The Detroit News
  5. William Maley

    BMW Raises Prices of U.S. Built X5 and X6 for China

    The effects of the on-going trade spat between the U.S. and China are beginning to be felt. According to Reuters, BMW is increasing the pricing on the U.S.-built X5 and X6 crossovers for the Chinese market. In a statement, BMW said the price increases will range from four to seven percent. This will only make a small dent in the 40 percent tariff being slapped on U.S. made vehicles entering China. BMW will be absorbing the remainder of the tariff for the time being. “BMW stands for free (trade) but can’t stand still without taking actions to respond to the market changes,” said a BMW spokeswoman. The German automaker isn't the only one to raise prices on vehicles destined to China. Reuters has learned from dealers that Mercedes-Bena has raised the price of the GLE-Class, which is built in Alabama. Source: Reuters
  6. The effects of the on-going trade spat between the U.S. and China are beginning to be felt. According to Reuters, BMW is increasing the pricing on the U.S.-built X5 and X6 crossovers for the Chinese market. In a statement, BMW said the price increases will range from four to seven percent. This will only make a small dent in the 40 percent tariff being slapped on U.S. made vehicles entering China. BMW will be absorbing the remainder of the tariff for the time being. “BMW stands for free (trade) but can’t stand still without taking actions to respond to the market changes,” said a BMW spokeswoman. The German automaker isn't the only one to raise prices on vehicles destined to China. Reuters has learned from dealers that Mercedes-Bena has raised the price of the GLE-Class, which is built in Alabama. Source: Reuters View full article
  7. The threat of a 20 percent tariff on vehicles exported from the European Union has a number of automakers panicking. But that tariff could be taken off the table if the EU removes their tariff on vehicles exported from the U.S. German paper Handelsblatt learned from sources that a meeting was held between the US ambassador to Germany, Richard Grenell and number of CEOs from German automakers. Grenell presented an offer directly from President Donald Trump - "elimination of all tariffs on automobile imports on both sides and removal of non-tariff barriers, such as regulations on the size of rear mirrors." Currently, the U.S. levies a 2.5 percent tariff on vehicles imported from EU. A 10 percent tariff is slapped on by EU members on vehicles imported from the U.S. The hope is that German automakers can put some pressure on the government to possibly bring this up with other EU members. Diamler, Volkswagen, the German Economy Ministry, and the European Commission declined to comment when asked by Reuters. Source: Handelsblatt, Reuters View full article
  8. The threat of a 20 percent tariff on vehicles exported from the European Union has a number of automakers panicking. But that tariff could be taken off the table if the EU removes their tariff on vehicles exported from the U.S. German paper Handelsblatt learned from sources that a meeting was held between the US ambassador to Germany, Richard Grenell and number of CEOs from German automakers. Grenell presented an offer directly from President Donald Trump - "elimination of all tariffs on automobile imports on both sides and removal of non-tariff barriers, such as regulations on the size of rear mirrors." Currently, the U.S. levies a 2.5 percent tariff on vehicles imported from EU. A 10 percent tariff is slapped on by EU members on vehicles imported from the U.S. The hope is that German automakers can put some pressure on the government to possibly bring this up with other EU members. Diamler, Volkswagen, the German Economy Ministry, and the European Commission declined to comment when asked by Reuters. Source: Handelsblatt, Reuters
  9. If the Trump administration goes forward with placing a 25 percent tariff on new cars, it could cost automakers between one to two million sales. Analysis done by researcher LMC Automotive said if automakers pass on the full 25 percent tariff to customers, it could cut sales by about two million - about 10 percent of annual U.S. sales. If automakers absorb some some of tariff, the sales drop would reduce to just a million. Jeff Schuster, senior vice president of forecasting for LMC Automotive tells Bloomberg that consumers would react in one of three ways. Look at the used car market Move to domestically built products with cheaper pricetags Put off buying a new car with the hope this is only temporary While new car sales have been slipping from the record high of 17.6 million in 2016, LMC Automotive is predicting a still-strong 17.1 million deliveries by the end of the year. Source: Bloomberg View full article
  10. If the Trump administration goes forward with placing a 25 percent tariff on new cars, it could cost automakers between one to two million sales. Analysis done by researcher LMC Automotive said if automakers pass on the full 25 percent tariff to customers, it could cut sales by about two million - about 10 percent of annual U.S. sales. If automakers absorb some some of tariff, the sales drop would reduce to just a million. Jeff Schuster, senior vice president of forecasting for LMC Automotive tells Bloomberg that consumers would react in one of three ways. Look at the used car market Move to domestically built products with cheaper pricetags Put off buying a new car with the hope this is only temporary While new car sales have been slipping from the record high of 17.6 million in 2016, LMC Automotive is predicting a still-strong 17.1 million deliveries by the end of the year. Source: Bloomberg
  11. Automakers already have enough of a headache with the current administration in the white house, but news that broke today is only going to make it even worse. Wilbur Ross, the U.S. Secretary of Commerce has announced that President Donald ordered an investigation under Section 232 of the Trade Expansion Act of 1962 to determine "whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security." "There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry. The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy," said Ross in a statement. There's also this interesting bit in the statement, The Wall Street Journal reported yesterday that tariffs as high as 25 percent could be slapped on new cars. Currently, the tariff on imported vehicles is at 2.5 percent. Imported trucks are already hit with a 25 percent tariff via the chicken tax. There are a couple likely reasons for this investigation, Mid-term elections are coming up and this is seen as a way to court voters in the heartland with the promise of bringing back jobs to the U.S. Possibly being used as leverage in negotiations with Canada and Mexico over the North American Free Trade Agreement (NAFTA); the European Union, and China. This investigation could hurt Mexico the most as they are the largest source of U.S. auto imports - delivering just under $50 billion of imports last year. As for automakers, Bloomberg reports that Jaguar Land Rover, Mazda, and Mitsubishi would be the most affected as all of their vehicles are imported. The news sent the stock prices of foreign automakers downward. Shares in Mazda dropped 5.2 percent at the close of trade in Japan, while Daimler and BMW saw their stock price drop more than two percent. This announcement has gotten condemnation from various governments, trade groups, analysts, and automakers. Here are just a few. "China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order," said Gao Feng, spokesman at the Ministry of Commerce in China during a regular press briefing. "We will closely monitor the situation under the U.S. probe and fully evaluate the possible impact and resolutely defend our own legitimate interests." “We have to consider this as something of a provocation. I have the growing impression that the U.S. no longer believes in the competition of ideas, but only the law of power. It fills me with grave concern,” said Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry. “The U.S. auto industry is thriving and growing. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America,” said John Bozzella, CEO of the Association of Global Automakers, a trade group that represents Hyundai, Nissan, Toyota, and others. Source: Automotive News (Subscription Required), Bloomberg, Reuters, Wall Street Journal (Subscription Required), U.S. Department of Commerce U.S. Department of Commerce Initiates Section 232 Investigation into Auto Imports Today, following a conversation with President Donald J. Trump, U.S. Secretary of Commerce Wilbur Ross initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended. The investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232. Secretary Ross sent a letter to Secretary of Defense James Mattis informing him of the investigation. “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” said Secretary Ross. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.” During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels. Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry. Automobile manufacturing has long been a significant source of American technological innovation. This investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies. Following today’s announcement, the Department of Commerce will investigate these and other issues to determine whether imports of automobiles and automotive parts threaten to impair the national security. A notice will be published shortly in the Federal Register announcing a hearing date and inviting comment from industry and the public to assist in the investigation.
  12. Automakers already have enough of a headache with the current administration in the white house, but news that broke today is only going to make it even worse. Wilbur Ross, the U.S. Secretary of Commerce has announced that President Donald ordered an investigation under Section 232 of the Trade Expansion Act of 1962 to determine "whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security." "There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry. The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy," said Ross in a statement. There's also this interesting bit in the statement, The Wall Street Journal reported yesterday that tariffs as high as 25 percent could be slapped on new cars. Currently, the tariff on imported vehicles is at 2.5 percent. Imported trucks are already hit with a 25 percent tariff via the chicken tax. There are a couple likely reasons for this investigation, Mid-term elections are coming up and this is seen as a way to court voters in the heartland with the promise of bringing back jobs to the U.S. Possibly being used as leverage in negotiations with Canada and Mexico over the North American Free Trade Agreement (NAFTA); the European Union, and China. This investigation could hurt Mexico the most as they are the largest source of U.S. auto imports - delivering just under $50 billion of imports last year. As for automakers, Bloomberg reports that Jaguar Land Rover, Mazda, and Mitsubishi would be the most affected as all of their vehicles are imported. The news sent the stock prices of foreign automakers downward. Shares in Mazda dropped 5.2 percent at the close of trade in Japan, while Daimler and BMW saw their stock price drop more than two percent. This announcement has gotten condemnation from various governments, trade groups, analysts, and automakers. Here are just a few. "China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order," said Gao Feng, spokesman at the Ministry of Commerce in China during a regular press briefing. "We will closely monitor the situation under the U.S. probe and fully evaluate the possible impact and resolutely defend our own legitimate interests." “We have to consider this as something of a provocation. I have the growing impression that the U.S. no longer believes in the competition of ideas, but only the law of power. It fills me with grave concern,” said Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry. “The U.S. auto industry is thriving and growing. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America,” said John Bozzella, CEO of the Association of Global Automakers, a trade group that represents Hyundai, Nissan, Toyota, and others. Source: Automotive News (Subscription Required), Bloomberg, Reuters, Wall Street Journal (Subscription Required), U.S. Department of Commerce U.S. Department of Commerce Initiates Section 232 Investigation into Auto Imports Today, following a conversation with President Donald J. Trump, U.S. Secretary of Commerce Wilbur Ross initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended. The investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232. Secretary Ross sent a letter to Secretary of Defense James Mattis informing him of the investigation. “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” said Secretary Ross. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.” During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels. Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry. Automobile manufacturing has long been a significant source of American technological innovation. This investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies. Following today’s announcement, the Department of Commerce will investigate these and other issues to determine whether imports of automobiles and automotive parts threaten to impair the national security. A notice will be published shortly in the Federal Register announcing a hearing date and inviting comment from industry and the public to assist in the investigation. View full article
  13. Suaviloquent

    NAFTA Renegotiation Thread

    NAFTA The latest rounds of the renegotiation talks have started, and they have an emphasis on U.S. demanding new content rules. Just to summarize, the U.S. wants more domestic content, which means NAFTA region countries, and 50% mandatory U.S. content, just to name a few of the changes. This hopefully isn't too political of an issue, it's more to do with how you feel about the rules should be for automakers and their suppliers doing business in America, Canada and Mexico. I think the U.S. demands - on paper, atleast are fair. U.S. is the largest market for autos in NAFTA region. I want to hear more of just how you feel about this issue. Feel free to source links where more of your opinions can be expanded and read more about.
  14. By William Maley Staff Writer - CheersandGears.com May 21, 2013 This maybe somewhat hard to believe, but German luxury models are cheaper than their Korean counterparts in South Korea. For example, a BMW 528i is around $64,000 in South Korea while Kia's flagship K9 is around $76,400. A difference of $12,400. Consumers in South Korea are taking notice of this and are going towards the Germans. Why are the German vehicles much cheaper? Lowered tarrifs. Thanks to a trade pact introduced back in 2011, duties on European products dropped from 8 to 3.2 percent. This means automakers such as BMW, Audi, and Mercedes-Benz have seen an sales increase of 25 percent in the first quarter. Meanwhile Hyundai saw its share in luxury vehicles drop 4..7 percent. “Customers who were loyal to the brand for over 20 years are breaking away. It shows that imported brands are now perceived as something accessible,” said Kim Pil Soo, professor of automotive engineering at Daelim College in South Korea and an adviser to the government. Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at william.maley@cheersandgears.com or you can follow him on twitter at @realmudmonster. View full article
  15. By William Maley Staff Writer - CheersandGears.com May 21, 2013 This maybe somewhat hard to believe, but German luxury models are cheaper than their Korean counterparts in South Korea. For example, a BMW 528i is around $64,000 in South Korea while Kia's flagship K9 is around $76,400. A difference of $12,400. Consumers in South Korea are taking notice of this and are going towards the Germans. Why are the German vehicles much cheaper? Lowered tarrifs. Thanks to a trade pact introduced back in 2011, duties on European products dropped from 8 to 3.2 percent. This means automakers such as BMW, Audi, and Mercedes-Benz have seen an sales increase of 25 percent in the first quarter. Meanwhile Hyundai saw its share in luxury vehicles drop 4..7 percent. “Customers who were loyal to the brand for over 20 years are breaking away. It shows that imported brands are now perceived as something accessible,” said Kim Pil Soo, professor of automotive engineering at Daelim College in South Korea and an adviser to the government. Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at william.maley@cheersandgears.com or you can follow him on twitter at @realmudmonster.

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