New Tariffs Threaten Consumer, Spelling Wider Trouble for Stocks
President Donald Trump on Thursday announced his intention to institute a 10% tariff starting September 1 on the $300 billion in goods that have so far escaped added levies, and financial markets have not taken the news well, reports MarketWatch. The Dow Jones Industrial Average, S&P 500 index and the Nasdaq Composite index all went from more than 1% gains Wednesday to at least 0.8% losses in the final hours of trade, following the president’s Twitter announcement, but the pain felt today could be just the start of volatility, analysts warn. The additional tariffs will exacerbate a worrying trend of declining business investment and the malaise will likely spread from the industrial sector to consumer-facing companies as well, analysts tell MarketWatch. “It goes to confidence and clarity and credibility,” Willie Delwiche, investment strategist at R.W. Baird told MarketWatch in an interview. “The U.S. economy can handle within reason a given level of tariffs, if it’s known what the level will be,” but the presidents unpredictable raising of the stakes will directly lead to businesses feeling like they need to preserve capital to prepare for the unknown. Read more here.
Foreign Auto Brands Show Hope for First 2019 Sales Gain
The sputtering U.S. auto market finally may have gotten into gear in July, with several foreign brands’ positive sales numbers lending credence to predictions the industry would register its first monthly gain of the year, reports The Detroit News. Honda Motor Co., Hyundai Motor Co., Subaru Corp., Toyota Motor Corp. and Volkswagen all reported July sales gains in the U.S. compared with a year ago last year. Bucking that upswing was Nissan Motor Co., which posted another month of declines in what’s shaping up to be a very painful year for the troubled carmaker. Detroit’s three major manufacturers have stopped reporting monthly numbers, so tallies for July won’t include official figures from Fiat Chrysler Automobiles, Ford Motor Co. or General Motors Co. Click here to read highlights from the automakers that are reporting results for last month.
Honda Q1 Operating Profit Drops 16% on Lower U.S. Car Sales
Honda Motor Co. reported a 16 percent drop in first-quarter operating profit on Friday, as a stronger yen weighed on overseas earnings and U.S. vehicle sales dropped. According to Automotive News, Japan's No. 3 automaker posted operating income of 252.4 billion yen ($2.4 billion) for the April-June period, compared with 299.3 billion yen a year ago and an average forecast of 246.9 billion yen from seven analysts polled by Refinitiv. The company's U.S. sales fell to 407,000 vehicles over the three-month period, from 425,000 vehicles a year earlier. It lowered its forecast for global sales in the year to March 2020 to 5.11 million vehicles, from its prior projection of 5.16 million and a record 5.323 million sold last year. Honda, however, reiterated its forecast for a 6 percent increase in operating profit to 770 billion yen ($7.2 billion) for this fiscal year. Read more here.
Nissan to Fix Suspension on About 200K Altima Cars
Nissan will do a "service campaign" to fix nearly 200,000 Altima midsize cars because a suspension part can come loose from the frame due to corrosion, reports The Detroit Free Press. The campaign falls short of a recall, but the U.S. National Highway Traffic Safety Administration is continuing an investigation into the problem that covers more than 2 million cars. The campaign includes 2013 Altimas in 22 U.S. states and Washington, D.C., that use salt to clear roads in the winter. Also covered are 2013 and 2014 Altimas in Canada. Owners will be notified in the fall to bring their vehicles in to have a rear lower control arm replaced. The company says in a statement that the corrosion issue hasn't been seen outside states that use road salt. Based on field inspections, few cars outside the salt states would experience the problem, the statement said. Read more here.
These Companies Are Buying Thousands of American Cars Made by Ford, GM, Fiat Chrysler
Individual buyers have always represented the bulk of U.S. car sales. While this is certainly still the case, corporate customers buying fleets of vehicles may be becoming increasingly important. Cox Automotive estimates that corporate fleet purchases will comprise 19% of new cars sales in 2019, amounting to 3.2 million vehicles. That would be the highest percentage and the highest total of fleet units sales in years. USA Today reports that 24/7 Wall St. compiled a list of the companies with the largest fleets of vehicles made by domestic automakers. Many of the companies with the largest American-made vehicle fleet are delivery services, while others are major corporations that need to send employees to install equipment or perform maintenance as part of their business. Such companies include telecommunications companies, utilities, shipping companies, and more. Read more here.
Webinar: Tax Reform Status Update for Dealers
Join AutoTalk on Tuesday, August 20th at 2:00pm ET as Amy Stillwell and Dan Cheyney of Moss Adams’ Automotive and Dealer Services Group update dealers on:
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Additional tax plan clarification on dealer operations
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What we know now
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How tax reform effects dealers
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What you can do to minimize your taxes
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