Can the U.S. Slap Tariffs on Auto Imports? Not Anymore
The Trump administration continues to threaten to impose tariffs on imports of autos and auto parts from around the world despite no longer having the authority to do so, writes John G. Murphy and Steve Lehotsky of the U.S. Chamber of Commerce in an opinion piece for The Hill. On January 23, Commerce Secretary Wilbur Ross said that “we have a perfect justification to put tariffs on if we wish to,” adding that people “simply don’t understand” the executive’s tariff authority. But our members in the auto sector raised doubts about the issue. Their question: Does the administration retain the authority under Section 232 of the Trade Expansion Act of 1962 to impose tariffs on auto imports? After extensive analysis of the issue, we discovered the short answer is: No, not anymore. Further, if the administration now attempts to impose these tariffs, the move would certainly be litigated, and that litigation has a high chance of success. Read more here.
Subaru Profit Falls 42% on Higher Warranty Costs
Subaru reported a 42 percent plunge in operating profit in the latest quarter amid falling wholesale volume, surging warranty outlays and a big hit from foreign exchange rates, reports Automotive News. Operating profit dropped to 57.8 billion yen ($530 million) in the fiscal third quarter ended Dec. 31, the automaker said on Wednesday in its earnings report. Net income declined 42 percent to 43.4 billion yen ($398 million). Revenue fell 2.3 percent to 878.9 billion yen ($8.06 billion) in the period, as worldwide wholesale volume fell 5.9 percent to 267,200 million units. In announcing the results, CFO Toshiaki Okada said higher costs to cover recalls, including a callback to fix coil springs, took a 29.3-billion-yen ($268.7 million) bite out of quarterly results. The parent company's profit woes contrast with the seemingly invincible face of Subaru in the United States, the Japanese automaker's biggest and most important market. Subaru's U.S. sales climbed 2.9 percent to 700,117 in 2019, and the company forecasts a 4 percent increase to 725,000 units in 2020. Attaining this year's target would represent a remarkable 12th year in a row of record U.S. sales for the all-wheel-drive niche player. Read more here.
Tesla Shares Dip as It Plans Delay to Model 3 Deliveries in China
Tesla shares dipped in pre-market trade on Wednesday after a company executive said that cars initially scheduled for delivery in early February will be delayed due to the outbreak of the new coronavirus, reports CNBC. The electric carmaker began rolling out Model 3 vehicles from its Shanghai Gigafactory to Chinese customers in January. Tesla has kept its Shanghai factory closed after the Lunar New Year following government guidelines. “The proposed delivery (of cars) in early February will be delayed,” Tao Lin, vice president at Tesla, announced on Chinese microblogging service Weibo, according to a CNBC translation, in response to a question from a user. “We will catch up the production line once the outbreak situation gets better.” Tesla shares were 2.7% lower in pre-market trade. Tesla Chief Financial Officer Zach Kirkhorn said on the company’s quarterly investor call last week that its Shanghai factory will remain closed for an extra week to a week-and-a-half. Read more here.
Ferrari Boosts 2020 Profit Estimate After Record Car Sales
Ferrari NV boosted its 2020 forecasts for sales and earnings after the supercarmaker posted record deliveries, a sign that Chief Executive Officer Louis Camilleri’s model-range renewal is bearing fruit, reports The Detroit News. The Italian company launched a record five new models in 2019, including the Roma Coupe with a mid-front-mounted 620-horsepower engine, which helped the Maranello-based manufacturer boost sales over 10,000 units a year for the first time. Camilleri, a former Philip Morris International Inc. executive, is revamping Ferrari models so the company can boost average prices of vehicles. At the same time, he is tackling a long-held goal of former Chairman Sergio Marchionne, who died in 2018: transform Ferrari into a fully-fledged luxury brand. Investors like Camiller’s strategy – Ferrari’s stock has risen more than 40% since he became CEO – though analysts say he’s clearly adopting a cautious approach on earnings outlooks for one of the world’s most iconic brands. Read more here.
Best Family Cars in the U.S.
Collectively, Americans spent 70 billion hours behind the wheel, according to AAA, which roughly breaks down to 31.5 miles driven per day on average. According to Fox Business, that number can easily increase for families that have young children or non-drivers in the mix who need to be dropped off for after-school activities and other events. Consumer Reports analyzed several brands to determine which cars are best for new families. It turns out that if you need a vehicle that is car-seat friendly, you might want to get a sedan over an SUV. If you want to maximize mileage, you may consider splurging on a hybrid. Here are the top 10 cars that are worth a quick look along with 2019 sales data compiled from the Automotive News Data Center.
February Webinar: Tax Reform Reversal or Status Quo?
Join AutoTalk for an early February program on Tuesday, February 11th at 2:00 p.m. ET and listen in as experts from Moss Adams help you navigate planning for the uncertainty and how to maximize today's tax environment.
They will also discuss:
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Areas That Are Highly Susceptible to Reversal in a New Administration
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How Can I Hedge Against Future Changes?
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What Steps Can I Take Now To Ensure I Am Maximizing The Current Tax Environment?
Around the Web
Where Did the $9M Cars Go? [NY Times]
2022 Hyundai Santa Cruz Spy Shots [MotorAuthority]
The Best Cars to Buy in 2020 [Gear Patrol]
Porsche's Sweepstakes Offers a Chance to Live 'The Heist' Super Bowl Ad [Autoblog]
