Tariff Threat Dampens Dealers' Optimism

First Up 03/11/19

Tariff Threat Dampens Dealers' Optimism
With a timer ticking on President Donald Trump's tariff decision, franchised dealers are bracing for a negative impact to their business, according to the latest Cox Automotive Dealer Sentiment Index survey. Automotive News reports that the survey gauges dealers' perceptions of the last 90 days and expectations for the next three months. The bloated optimism of last year is beginning to fade, the survey found. Sentiment is weaker for franchised dealers, down to 50 — the lowest level Cox has reported since the survey's launch — from 55 in the first quarter of 2018. For franchised and independent dealers combined, sentiment is 48, down from 49 a year earlier. More than half of franchised dealers are concerned that tariffs will drive up vehicle prices at their stores, according to the index, with 64 percent wary of higher prices on all new vehicles and 63 percent worried about higher import-vehicle prices. Read more here.  

BMW is Biggest Automotive Exporter by Value for Fifth Year
Germany’s automaker BMW AG said on Friday it was the biggest U.S. automotive exporter by value for the fifth consecutive year, with exports totaling over $8.4 billion in 2018. Reuters reports that the company said it exported 234,689 units of its X model sport utility vehicles and coupes from its Spartanburg, South Carolina, plant during 2018. “Despite...the ongoing uncertainty regarding trade and tariffs, plant Spartanburg is still positively contributing to the U.S. balance of trade,” said Knudt Flor, president and CEO of BMW Manufacturing Co LLC. “The remarkable partnership between BMW and South Carolina continues to thrive, and this is evident by the fact that our state remains the nation’s leader in the export sales of completed passenger vehicles,” South Carolina Secretary of Commerce Bobby Hitt said. Read more here.   

The Tariffs Nobody Wants
In almost every case, whenever a tariff or quota is imposed on imports that tax is strongly supported by the domestic industry getting the protective shield from lower-priced foreign competition. But what is peculiar about President Trump’s proposed 25 percent auto tariff is that even most of the domestic car industry producers don’t want it, writes economist Stephen Moore in the Washington Times. Last week, the Driving American Jobs coalition issued a statement opposing auto tariffs. Mr. Trump’s heart is in the right place. He wants to save the U.S. auto industry and he wants to save American auto jobs. The biggest impact on the industry is not foreign competition, however. It is the radical change that is coming very soon with driverless cars, which will lower the demand for cars in the future as more people simply order rides on-demand and online through Uber-type applications rather than own cars. Tariffs have almost never saved a domestic industry from decline and often times by sheltering domestic producers from competition only reward and prolong bad business practices. The Trump administration should stop trying to save an industry that doesn’t need or want saving. Read more here.  

Debt-Saddled Buyers Lean on Mom, Dad
With prices rising for new and used vehicles, and student debt posing a mounting burden, Automotive News reports that more young adults are asking their parents for assistance with auto purchases, insurance costs, and repairs. As their children's personal debt reaches unprecedented highs — TransUnion says millennials have a record $683 billion in student loans to worry about when figuring out how to afford a car payment — some parents are putting their own financial security on the line to keep their family on the road. There's little data available on how many parents shoulder vehicle expenses for their adult children. "We live in a country where you have to have a car. Uber is not an affordable alternative. You can't get an Uber every day to your job," said Jonathan Banks, general manager of vehicle valuations at J.D. Power. "The majority of our population is still in a rural setting." For all Americans, fast-rising student loan debt is sapping income they could have used for other purposes, including a vehicle. More than a quarter of millennials with student loan debt have delayed buying a car because of it, according to a survey by Bankrate.com released in February. Read more here. 

Nissan Says Its Electric Car Has Become the First to Break 400,000 in Sales
Japanese car giant Nissan says its compact hatchback called Leaf has become the first electric car to exceed 400,000 in sales. CNBC reports that last week, the business said the landmark figure had solidified the Leaf's "leading role in the global shift toward more sustainable mobility."  Since its launch in 2010, owners of the vehicle have, in total, driven over 10 billion kilometers. Nissan added that the number of Leaf cars sold since its launch was enough to have saved 3.8 million barrels of oil annually.  The model was the bestselling electric vehicle in Europe last year, Nissan said. Overall, 408,000 plug-in vehicle units were sold across Europe in 2018, according to analysis from EV-Volumes. In 2017, there were more than 3 million electric and plug-in hybrid cars on the planet's roads, according to the International Energy Agency's (IEA) Global Electric Vehicles Outlook. This represents an increase of 54 percent compared to 2016. Almost 580,000 electric cars were sold in China in 2017, according to the IEA, while around 280,000 were sold in the U.S. Read more here. 

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