If Trump Slaps Tariffs on Mexican Imports, You'll Pay More to Buy a Car and Keep it Running
If the United States imposes 5% to 25% tariffs on all imports from Mexico starting Monday, U.S. consumers can expect to see sharp price increases on new cars and trucks as well as higher costs to maintain and repair their existing vehicles, writes Kristin Dziczek of the Center for Automotive Research in a USA Today editorial. The tariff move also endangers ratification of President Donald Trump’s signature trade agreement — the U.S.-Mexico-Canada Agreement — and sows uncertainty that puts a chill on investments in America. Studies have shown that U.S. producers and consumers bear the entire burden of paying for tariffs. For some vehicles — such as small or economy sedans that cannot be produced profitably in the United States — the addition of a 5% to 25% tariff could make it cost prohibitive to offer that vehicle for sale in the U.S. market. In those cases, U.S. consumer choice will be restricted, which puts further upward pressure on prices. Read the rest of Dziczek’s piece here.
Auto Loans Hit Record High, Sending Borrowers with the Best Credit to the Used Market
People buying a new vehicle are borrowing more and paying more each month for their auto loan, reports CNBC. Experian, which tracks millions of auto loans each month, said the average amount borrowed to buy a new vehicle hit a record $32,187 in the first quarter. The average used-vehicle loan also hit a record, $20,137. “We have not seen a slowdown in loan demand. In fact, volume for new and used loans is up from previous years,” said Melinda Zabritski, senior director of automotive financial solutions for Experian. With sales of new vehicles moderating slightly after the four best years the industry has ever seen in the U.S., dealers and auto executives are watching whether consumers will be more resistant to the steady increase in new car prices. That is not happening. In fact, the average amount borrowed topped $32,000 for the first time ever. As a result, the average monthly payment for a new vehicle continued to climb to a new high of $554 and to a record $391 for used vehicles, according to Experian. Read more here.
Toyota, Subaru Rate Highest in Child Restraint Hardware Ease of Use, IIHS Says
Toyota Motor Corp. and Subaru Corp. are leading the way in making child restraints more accessible in their vehicles while the Detroit 3 continue to lag behind, the Insurance Institute for Highway Safety said in a report Thursday. According to Automotive News, IIHS senior research engineer Jessica Jermaikian said LATCH, which stands for lower anchor and tethers for children, has been in vehicles for over 15 years and automakers have flexible requirements for where the hardware is installed. "Because they have all this flexibility in where they can put these anchors, many of them are really difficult to use," Jermaikian said. "Parents have a lot of complaints and challenges with getting a good, tight installation because they have trouble finding the LATCH hardware." Toyota and Subaru rank highest in 2019-model ratings, followed by Honda for ease-of-use. Toyota and Subaru each had seven models assigned the top "good+" IIHS rating for LATCH accessibility for 2019, while Honda had four. Only one Detroit 3 vehicle, the Jeep Cherokee, earned the top rating. No products from General Motors or Ford Motor Co. were ranked in the top categories. Read more here.
FCA Withdraws Renault Merger Offer
Fiat Chrysler Automobiles NV is withdrawing "with immediate effect" its blockbuster merger offer to Renault SA, a bid to create a pan-European automaker that would rival Volkswagen AG and invest in costly next-generation technology. According to The Detroit News, after a six-hour board meeting on the outskirts of Paris, Renault said late Wednesday it was unable to make a decision on a 50-50 merger proposal from Fiat Chrysler after the French government sought a delay. "FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties," the Italian-American automaker said in a statement issued early Thursday from Europe. "However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully." The move is a stunning reversal, coming after two consecutive days of meetings by Renault's board and public lobbying by the federal government of France seeking a board seat, job protections for workers, and effective veto rights over the selection of the combined company's future CEO. Read more here.
FCA's Head of U.S. Sales, Ram Trucks Files Whistleblower Suit
The head of U.S. sales and the Ram truck brand for Fiat Chrysler Automobiles has filed a whistleblower lawsuit against the company, which he said had retaliated against him because he was cooperating with a U.S. government investigation into FCA's sales reporting, reports The Detroit Free Press. Reid Bigland, a 22-year veteran of the company and its predecessors who had, at times, been suggested as a possible CEO candidate, claims in the suit, originally filed in Oakland County Circuit Court, that the company withheld most of his 2018 compensation as punishment and intended to use it to pay fines. His attorney, Deborah Gordon of Bloomfield Hills, declined to give the precise amount but said it was in the millions of dollars. Bigland, who also serves as CEO of FCA Canada, said he "refused to become a scapegoat for defendants' long-standing reporting practices which predated him by reporting the full scope of this information to the U.S. Securities and Exchange Commission." Read more here.
Kerrigan Advisors First Quarter 2019 Blue Sky Report®
The auto retail buy/sell market was off to a strong start in 2019 with 54 completed transactions in the first quarter, as reported in the recently released Kerrigan Advisors First Quarter 2019 Blue Sky Report®. Despite new vehicle sales declines, the ability of the dealership business model to sustain profits continues to drive a strong buy/sell market and attract the interest of new players. The Blue Sky Report® is the leading industry publication analyzing the auto retail buy/sell market and current franchise values. Read the report here.
Around the Web
How Amazon, Google, Apple, and Microsoft Are Competing for the Screen in Your Car [CNBC]
What Car Should I Buy? Avoid the Crossovers with Cardboard Seats [Forbes]
Toyota Supra vs. Porsche Cayman 718 vs. BMW M2: Which is the Sports Car Champ? [MotorTrend]
Next-Gen 2021 Kia Sorento Spied Testing in the Alps [Autoblog]
