June Sales Advance 5.3%; SAAR Soars

First Up 07/05/18

Automaker Shares Soar on U.S. Proposal to Eliminate Tariffs
Shares in European carmakers are having their best trading day in two years after a U.S. official floated a proposal to eliminate vehicle-import tariffs on both sides of the Atlantic. According to Bloomberg, German auto-industry executives met with U.S. Ambassador to Germany Richard Grenell Wednesday, where he was said to have told participants Washington was seeking talks with the European Union and Berlin on lowering car duties to zero. Trump’s repeated salvos on trade and push to extract better terms for the U.S., often singling out German carmakers, have prompted various initiatives to avert a full-blown trade war at the European level, which decides trade policy for the bloc. The EU has warned that a 25 percent tariff on U.S. imports would add 10,000 euros ($11,684) to a European-built car’s sticker price. The automakers’ meeting and U.S. proposal come as the EU is considering new plans to alleviate worsening trade tension. Trump has ordered a probe into whether imports of cars and car parts damage national security. He’s also engaged in a tit-for-tat escalation with China, which will result in a 40 percent tariff on U.S.-made cars – many of them German brands – shipped into the Asian country. Read more here

June Sales Advance 5.3%; SAAR Soars
U.S. light-vehicle deliveries, boosted by healthy incentives, America's surging appetite for light trucks and an extra weekend of sales, rose 5.2 percent in June as the auto industry closed out the first half of 2018 on a high, reports Automotive News. The seasonally adjusted sales rate for June came in at 17.47 million, up sharply from June 2017’s sale pace of 16.72 million and May’s 16.91 million rate. “We’re in a good, old-fashioned bull market right now,” Charlie Chesbrough, senior economist for Cox Automotive, told Bloomberg News. “There’s been quite a bit of concern regarding trade and tariffs, but car buyers don’t seem to be worried yet.” The biggest automakers in the U.S. all posted increases, wrapping up the first half of 2018 on a positive note amid analysts’ forecasts of a rougher ride later this year. It was the fourth monthly and second-biggest sales advance of the year. Through June, sales have risen 1.9 percent over 2017’s level. Still, most analysts had been projecting the industry will end the year below the 17 million mark for the first time since 2014. Read more here.

Auto Tariffs Likely to Send Used Car Prices Higher, Experts Say
Prepare to pay more for your used car, reports The Detroit Free Press. If the U.S. Commerce Department adopts President Donald Trump's proposal of a 25 percent tax on imported new cars and car parts, the higher costs for carmakers to assemble and sell new cars could boost demand for used vehicles, analysts predict. "The parts would be the most affected for sure, assuming that the administration will put tariffs in place for parts as well," said Augusto Amorim, senior manager for Americas vehicle sales forecasts at LMC Automotive in Troy. "I don’t think they’d consider any tariff on the used car at this point." If a new car is priced higher, its rate of depreciation is now starting at a higher point, said Keller. This will bump up prices on late-model used cars. Secondly, there are the simple laws of supply and demand, said Ivan Drury, senior manager of industry analysis for Edmunds in Santa Monica, California. "The used market could be injected with millions of consumers it never had before," Drury said. "It will cause a huge uptick in demand and we will see prices go up across the board for used cars." Read more here. 

Japanese Automakers Make Way More Cars in U.S. Than They Import from Home
After speaking with Shinzo Abe in March, President Donald Trump tweeted that he'd pushed the Japanese prime minister to negotiate a "much better'' trading relationship with the U.S., reports Automotive News. When it comes to cars, Japanese companies are already assembling more than twice as many vehicles in the U.S. than they import from Japan. That's the result of measures taken since the 1980s, when laid-off Detroit autoworkers vented their frustrations by bashing Japanese cars with sledgehammers. Japan-based automakers assembled 3.8 million vehicles in their U.S. factories in 2017, up from just 296,569 in 1985, according to the Japan Automobile Manufacturers Association. Meanwhile imports dropped 45 percent to 1.7 million cars and trucks, down from 3.1 million. As a step toward what he views as a more balanced trade relationship between the U.S. and other countries, including Japan, Trump is considering a plan to impose a tariff of as much as 25 percent on the value of vehicles and components imported into the country. Read more here.  

Death on Foot: Where You're Most Likely to Die in the 5 Most Dangerous Cities
Collectively, 36 pedestrians were killed when struck by vehicles along these worst stretches of road in the worst five cities around the country between 2009 and 2016 for pedestrian fatalities, federal highway safety records show.  The victims ranged in age from ages 14 to 88. They were of various races and the crashes that killed happened both during the day and in the dead of night, though many were outside of crosswalks. USA Today is featuring a sketch of the most dangerous stretches of roadway in the five most dangerous large cities for pedestrian deaths. Read more here.   

Webinar: Tax Reform – Dealer and Owner Implications
Join AIADA’sJuly AutoTalk webinar on Tuesday, July 17th as Amy Stillwell and Lewis Fisher, Automotive and Dealer Services division of Moss Adams discuss tax reform and what it could mean for your dealership.

They’ll cover: 
•    Important steps to take now
•    Planning for the future
•    What's gained/ What's lost

Sessions will be held at 10:00 a.m. EDT and 4:00 p.m. EDT. To register, click here.

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