Same Mission, Evolving Industry

First Up 02/19/20

Same Mission, Evolving Industry

In 1970, a disparate group of 15 Volkswagen dealers pooled their resources to lobby Congress against a protectionist 25 percent tariff imposed six years earlier on imported light trucks. Automotive News reports that half a century on, that initial — and ultimately unsuccessful — effort to fight what was dubbed the Chicken Tax has evolved into a highly effective lobbying strike team, jumping into the political fray with and on behalf of dealers each time prospective limitations to free trade threaten today's globally interconnected auto industry. The American International Automobile Dealers Association — the successor to that original group called the Volkswagen American Dealers Association — marked its golden anniversary at a special luncheon Monday, Feb. 17, during the NADA Show in Las Vegas. And while the Chicken Tax is still in place, AIADA's work has taken on new urgency in recent years, especially as the Trump administration has used the threat of retaliatory automotive tariffs to pressure longtime trading partners into negotiating different terms to existing long-term trade deals. Read more here. 

High Car Prices Are Locking Out Younger Shoppers

Auto dealers want to lure young buyers back to new-car lots. Automakers have in recent years turned away from cheaper models, such as hatchbacks and small sedans, to focus their lineups on the higher-priced SUVs and trucks that have surged in popularity with the drop in fuel prices. According to The Wall Street Journal, the shift has helped lift new-vehicle prices to record levels and boost profitability for the auto sector. But dealers, gathering at a conference in Las Vegas this past weekend, warned that the trend is also pricing many buyers out of the new-car market. The main casualty, they said, are younger adults. “We really do need the younger buyers in these new vehicles,” said Charlie Gilchrist, the 2019 chairman of the National Automobile Dealers Association, in an interview. Used-car shoppers typically aren’t loyal to one brand, and auto retailers count on drawing first-time buyers to build repeat business, he said. The number of new vehicles purchased by buyers between the ages of 16 and 35 fell nearly 4.5% last year, according to J.D. Power. That is a more dramatic decrease than the overall U.S. market saw in 2019. By comparison, purchases by customers older than 56 increased nearly 1% in 2019, J.D. Power found. Read more here. 

GM, Fiat Chrysler, and Toyota Resume Auto Production in China

General Motors, Fiat Chrysler, and Toyota Motor on Tuesday confirmed that they’ve reopened their factories or are beginning to restart production in China following extended holiday shutdowns due to the COVID-19 outbreak. According to CNBC, Michael Palese, a spokesman for Fiat Chrysler, said the company’s plant in Guangzhou, located hundreds of miles south of the coronavirus epicenter in Wuhan, has resumed production this week. The company’s second assembly plant in China is “expected to resume operations soon,” he said in an email. Palese said Fiat Chrysler “continues to monitor its global supply chain in relation to the coronavirus outbreak in China.” There has been no impact to the company’s operations in North America, he said. GM, as planned, “began the process of restarting production” Saturday as part of a two-week process to reopen its 15 assembly plants in the country, according to Jim Cain, a company spokesman. He said GM has not experienced any impact to its U.S. truck production, which union officials last week said could be impacted due to parts shortages in the coming weeks. Read more here. 

Toyota Betting All-Wheel Drive Can Save Its Passenger Car Lineup 

Two years ago, Toyota came face-to-face with the new automotive reality. Long the best-selling car in its line-up – and the country’s fourth best-seller overall – the Camry suddenly was brushed aside by the Toyota RAV4 as demand for SUVs and CUVs rapidly overwhelmed sales of sedans and other passenger cars. According to The Detroit Bureau, the most radical shift in the U.S. automotive market in decades has seen manufacturers like Ford, General Motors and Fiat Chrysler all but abandon the sedan market. For its part, Toyota says it remains committed to its passenger car line-up. And to help bolster demand, the Japanese automaker is lifting a page out of the SUV handbook by adding all-wheel-drive options on models such as Camry, Avalon, and the Prius. Toyota has not offered all-wheel-drive on the Camry since 1991 and Toyota’s engineers back in Japan initially nixed the idea when they introduced a new generation of the midsize sedan using the TNGA platform when it was introduced in 2018. However, Toyota Motor North America continued to argue that the addition of the all-wheel-drive feature would make the cars more appealing to consumers in the United States, TMNA officials said. Read more here. 

Nissan to Test Vehicle Subscriptions in Houston

Nissan is stepping into the vehicle subscription game — the latest mass-market automaker to dabble in this unproven business model. According to Automotive News, the Japanese automaker is testing the waters via a pilot program in Houston. The Nissan Switch subscription program includes on-demand access to 11 models, including the Altima and Nissan Leaf Plus sedans, Rogue and Pathfinder crossovers; Titan and Frontier pickups; and 370Z and GT-R sports cars. The monthly membership, from $699 to $899 per month, includes unlimited vehicle swaps, as often as a vehicle a day. Vehicle delivery, insurance, roadside assistance, and regular maintenance is included. "Nissan Switch is another way that Nissan is testing alternatives to the notion of traditional mobility, without long-term financial commitments for our customers," Andrew Tavi, Nissan's vice president of business development, said in a statement. "This program provides more choice, convenience, and flexibility." Read more here. 

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