U.S. to Promise to Not Hike Tariffs on Japan Autos, Report Says
Japan and the U.S. are working toward a joint leaders’ statement that would include a U.S. promise not to hike tariffs or introduce quotas on Japanese cars, the Tokyo Shimbun newspaper said Monday. Bloomberg, reporting on the development, reports that the statement is set to be issued after a meeting between President Donald Trump and Japanese Prime Minister Shinzo Abe in New York next week. The two leaders are also expected to sign a broader bilateral trade agreement at the meeting. The threat of punitive tariffs on Japan’s lucrative car industry prompted Abe to agree to bilateral trade talks last year. Trump said last month he wasn’t planning on hiking tariffs on Japan’s autos for the moment, but he didn’t rule out such a move in future. Japan will reduce or abolish tariffs on U.S. beef, pork, and wheat in line with previous agreements under the regional trade partnership rejected by Trump in 2017, the paper reported, without saying where it got the information. Read more here.
Dealers Worried But Used Profits Offer Hope
Economic anxiety is weighing on franchised U.S. car dealers, but a robust used-vehicle market fueled traffic and profitability this summer, shoring up those dealers' outlook on the market, reports Automotive News. Setting aside price pressures and softening new-vehicle sales, 2019 has been remarkably stable for U.S. auto dealers, Cox Automotive notes in its latest Dealer Sentiment Index report. Vehicle shoppers have borne up under the burden of higher costs from rising vehicle prices, a pullback in automaker incentives and higher-than-usual interest rates. High lease penetration has fueled a desirable mix of off-lease used vehicles with strong residual values for dealers to work with. "It's an environment that continues to be healthy for franchises who are focusing on used-vehicle operations," Jonathan Smoke, Cox's chief economist, told Automotive News. "It's a good-news-bad-news story. The market's not going to give you growth, but the market is going to have plenty of quality inventory for you to make the most out of this situation." Read more here.
On Strike! UAW Workers Walk Out on GM
The United Auto Workers went on a nationwide strike against General Motors on Sunday night after contract talks broke off Sunday, reports Fox Business. It’s the first strike against GM in 12 years. Local Union leaders from across the nation met Sunday morning after the 2015 General Motors collective bargaining agreement expired Saturday night and opted to strike at midnight on Sunday. Union officials say both sides are far apart in the talks, while GM says it has made significant offers. The strike will affect GM plants in Michigan, Ohio, Tennessee, Kentucky, New York, Texas, and elsewhere in the U.S. Read more here.
Oil Prices Spike as Trump Administration Blames Iran Attack on Saudi Arabia
Global energy prices spiked on Monday after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, reports CBS News. President Trump has warned the U.S. is "locked and loaded" to respond as two of his cabinet members blame the attack on Iran. U.S. officials offered satellite images of the damage at the heart of the kingdom's crucial Abqaiq oil processing plant and a key oil field, alleging the pattern of destruction suggested the attack on Saturday came from either Iraq or Iran — rather than Yemen, as claimed by Iranian-backed Houthi rebels there. Benchmark Brent crude gained nearly 20% in the first moments of trading Monday before settling down to 10% higher as trading continued. A barrel of Brent traded up $6 to $66.28. U.S. benchmark West Texas crude was up around 9%. U.S. gasoline and heating oil similarly were up over 8% and 7% respectively before markets opened in New York. Read more here.
Auto Buyers Help Boost U.S. Retail Sales
U.S. retail sales rose moderately in August, driven higher by a jump in auto buying and healthy online sales, evidence that consumers are still spending enough to support growth, reports The Detroit News. The Commerce Department said Friday that retail sales increased 0.4% last month, down from a strong 0.8% in July. There were also signs that consumers have become more cautious. Excluding autos, sales were unchanged for the first time since February. The data follows signs that consumer confidence, while still strong, has slipped a bit as the U.S.-China trade war has intensified. U.S. businesses have cut back on their investment and expansion plans amid the trade war’s uncertainty and exports have declined. That has left consumers as a key source of growth. The economy is still creating jobs, though at a slower pace than last year, and wages are rising at a decent rate. That should continue to underpin Americans’ ability to spend. Read more here.
Webinar Tomorrow: Auto Market Trends & Outlook
Join AIADA’s AutoTalk tomorrow, Tuesday, September 17th - 2:00pm EST as Jonathan Smoke, Cox Automotive's Chief Economist, reviews:
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Key economic and automotive market trends
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Latest forecasts
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Economic fundamentals and the impact key trends have on new and used car sales, including vehicle prices and affordability
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Wholesale market supply
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Auto loan rates
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Consumer credit access
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Ongoing trade concerns and the challenges impacting dealers
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