As Interest Rates and New Vehicle Prices Rise, Loan Terms and Payments Reach for the Sky

First Up 02/06/19

Feb. 6, 2019

Trump Requests Approval of NAFTA Replacement, Retaliatory Tariff Power

President Donald Trump on Tuesday asked Congress to pass his new trade deal with Canada and Mexico and give him the power to unilaterally increase tariffs on countries that charge levies for U.S.-made goods. The Detroit News reports that in his second State of the Union address, Trump urged lawmakers to back the new agreement, known as the U.S.-Mexico-Canada Trade Agreement. He also said the tariff measure, known as the United States Reciprocal Trade Act, would allow him to protect American workers hurt by decades of flawed trade deals. The Driving American Jobs Coalition, which includes AIADA, issued a statement in advance of the president’s speech which read, in part, “One of the most consequential policies under consideration by the Administration is potential new tariffs on imported automobiles and motor vehicle parts. We look forward to working with the Administration and lawmakers in both parties to find common sense solutions to our problems that do not include tariffs targeting the automotive industry.” For more on what the president had to say about trade in his state of the union address, click here.

Honda's In-Car Media Will Educate Your Kids on the Way to School

Right now car companies' ideas for kids on the road are mainly the same idea: preoccupy them. That Blu-Ray in the backseat translates to quiet for you and makes the trip more manageable. According to Forbes, Connected Travel thinks it can make driving your child around not just tolerable, but an enhanced experience to build on rewards-oriented behavior modification and to complement future in-school learning. You'll see its mixed reality platform in Hondas in coming years, along with a suite of apps in the Dream Drive end-to-end commerce and infotainment system. Obvious models to build with Connected Travel's platform would be the family-friendly vehicles Pilot and Odyssey, but Honda Innovations managing director of strategic partnerships John Moon said in an email that nothing was definite. Connected Travel says it wants to allow the car’s intelligence to wind an activity down when approaching the destination. And that activity should be heads up, in a way that enlivens the real, outside world rather than an activity that tunes it out. For more on this technology and its partnership with Honda, click here.

Toyota Quarterly Profit Flatlines as Rising Costs Offset Better Mix

Toyota's operating profit flatlined in the latest quarter as cost increases and lackluster sales offset a more profitable product mix and foreign exchange windfalls. Automotive News reports that operating profit advanced just 0.3 percent to $6.13 billion in the automaker's fiscal third quarter ended Dec. 31. Net income, by contrast, plunged 81 percent to $1.64 billion. The net result in the latest quarter tumbled for two reasons. Firstly, last year’s net income was inflated by a one-time gain from U.S. tax reform. Secondly, this year’s earnings were hit by a separate one-time expense for unrealized gains and losses on equity securities. That charge resulted in a change in accounting methods. Global retail sales increased 2.9 percent to 2.71 million vehicles in the October-December period, including results from its Daihatsu small-car subsidiary and truck-making affiliate Hino. The profitability of Toyota's model mix improved in the quarter, as the automaker shifted its lineup more toward higher-margin light trucks and clamped down on incentives. For more from Toyota’s earnings report, click here.

As Interest Rates and New Vehicle Prices Rise, Loan Terms and Payments Reach for the Sky

Looking at last month’s stats, you’d have to go back to the safe and comfortable pre-Twitter era to find a January in which fewer people got their hands on a zero percent new vehicle loan. January 2006, to be exact. Auto news website The Truth About Cars reports that today you’re likely paying a lot more, but you’re spreading it out over a longer term. Last month, the average new vehicle buyer borrowed $31,707 and financed the vehicle over an average term of 69.1 months. That’s up from 61 months in 2010, and 68 months a year ago. While a longer term helps get buyers into the vehicle of their dreams, it widens the siphon on their bank account, especially considering the average APR in January — 6.19 percent — was up 1.2 percentage points over last January’s average (4.9 percent). Your average American financed their new car purchase with payments of $551 last month. It’s no wonder, then, why we’re seeing buyers flood the used vehicle market — and why certain segments of that market (mainly, small cars) are rising steeply in value. For the full story, click here.

Bet Everything on Electric: Inside Volkswagen's Radical Strategy Shift

If Volkswagen realizes its ambition of becoming the global leader in electric cars, it will be thanks to a radical and risky bet born out of the biggest calamity in its history. The German giant has staked its future, to the tune of $91 billion, on being able to profitably mass-produce electric vehicles - a feat no carmaker has come close to achieving. The biggest strategy shift in Volkswagen’s 80 years has its roots in a weekend crisis meeting at the Rothehof guesthouse in Wolfsburg on October 10, 2015, senior executives told Reuters. At the meeting hosted by then VW brand chief Herbert Diess, nine top managers gathered on a cloudy Saturday afternoon to discuss the way forward after regulators blew the whistle on the company’s emissions cheating, a scandal that cost it more than 27 billion euros in fines and tainted its name. “It was an intense discussion, so was the realization that this could be an opportunity, if we jump far enough,” said Juergen Stackmann, VW brand’s board member for sales. For more on what VW’s all or nothing bet, click here.

How One Auto Retailer Gets People into the Store by Helping Them At Home

With countless research options at their fingertips, today's car buyers are more informed than ever - resulting in fewer trips to dealerships. On average, new car buyers visit two dealerships before making a purchase. For Park Place Lexus, a prominent dealership in Texas, it was important to adapt the traditional car buying journey to meet new consumer needs. See how Park Place Lexus developed a three-pronged approach to create a more assistive online experience using the right measurement metrics to gauge success.

Around the Web

Angry Trucker Runs an Ambulance off the Road, Battles Cops for Five Hours with a Machete [Jalopnik]

Mazda Teases a New Compact SUV for Geneva [AutoBlog]

This Factory-Restored Porsche Carrera GT Won’t Be to Everyone’s Taste [Automobile Mag]

Ford cranks up massive V8, towing capacity for 2020 Super Duty pickups [Detroit Free Press]