Tariffs May Threaten U.S. Auto Jobs, European Executives Warn

First Up 03/12/18

The World Turns on Trump Over Tariffs 
President Donald Trump ratcheted up the economic pressure on the European Union over the weekend, threatening to turn allies into enemies at home and abroad with his trade pronouncements, reports Politico. The decision to slap hefty tariffs on imports of steel and aluminum, which the White House made formal on Thursday, has roiled international markets, angered longtime trading partners, and prompted threats from the president’s own party to stop the tariffs through legislation. At the same time, Trump’s decision to exempt Canada and Mexico and allow other countries to avoid the penalties if they negotiate a deal to address U.S. national security concerns has set off a high-stakes rush among nations eager to avoid the penalties but unclear on what, exactly, the U.S. wants in return. The uncertainty has already spooked the stock market and spurred protests from industries as diverse as car parts manufacturers and soybean farmers which, until now, had cheered the president’s deregulatory agenda. "The burden of these tariffs, as always, will be passed on to the American consumer,” said Cody Lusk, president and CEO of the American International Automobile Dealers Association. "Car shoppers looking for a deal will instead find that they are paying a new tax to transport themselves and their families.” Read more here

Trump Tariffs May Threaten U.S. Auto Jobs, European Executives Warn
The Wall Street Journal reports that European auto executives are warning that if President Donald Trump imposes prohibitive tariffs on automotive imports they could be forced to curb investment in their U.S. factories, threatening American jobs at car plants owned by foreign manufacturers. Mr. Trump ordered stiff duties on steel and aluminum imports last week, while giving allies, like the European Union, a chance to negotiate exemptions. Then, at a weekend rally in Pennsylvania, he appeared to take aim squarely at Europe, threatening to extend tariffs to the continent’s car industry: “They kill us on trade” and: “We’re going to tax Mercedes-Benz... We’re going to tax BMW. ” However, raising tariffs on imported cars could prove trickier than on steel and aluminum imports and could have unexpected effects. If European car makers react by cutting investments in their U.S. plants, it could even hurt U.S. car exports. That is because Germany’s big auto makers— Volkswagen AG , BMW AG and DaimlerAG , which makes Mercedes—have built factories in the U.S. and Mexico in recent years that are geared to export to Europe and China, not just to sell to Americans. Read more here

VW Makes All-American Bid to Regain 1970 Magic 
Forty years ago, a teenage Hinrich Woebcken spent a year as an exchange student with an American family near Rochester, N.Y., going to class in an American school, soaking up American culture, being American in every way — at least in spirit, reports Automotive News. "I even went to the prom," the 6-foot-4-inch German recalls with a grin. That experience was transformational; the metal shop at Churchville-Chili Senior High School inspired Woebcken to pursue industrial engineering. Now, reports Automotive News, the 57-year-old CEO of Volkswagen Group of America wants his company to undergo the same type of transformation. After two years spent righting a troubled ship, Woebcken has a new goal: turning his organization into an American car company — at least in spirit. "I owe America, I owe Rochester, N.Y., and I owe this metal shop for how I basically went to start my adult life," Woebcken says. "We want to get more Americanized not only in our product but in our business. It's not that we're giving up on the genes of the Volkswagen brand. Volkswagens are Volkswagens. But what we recognized over the years is ... that we were too much a small-car company, too much a sedan company." Read more here

Business Rewards Can Follow if F&I and Service Work as Partners 
The finance and insurance office and the service department are the two most profitable areas of an auto dealership, but they often work in silos: F&I managers accomplish their tasks, and service advisers focus on their orders. Automotive News reports that to be most effective, though, F&I and service have to work hand in hand. Otherwise, the dealership is missing out on ancillary product sales, customer retention, service business and more, dealership insiders and other F&I experts say. When F&I managers know the service advisers and what repairs the service department makes, they can use that knowledge to illustrate the value of F&I products and services, says Matt Woods, director of field operations at Service Group, an F&I company in Austin, Texas. Some F&I managers even walk customers to the service lane to show them repairs being done, he said. Read more here

Lamborghini's $200K SUV Sales Are Better Than Expected: CEO 
Lamborghini's high-powered, hyper-priced SUV is selling better than expected, with most of the buyers new to the Lamborghini brand, according to the company's CEO. In an interview with CNBC, Lamborghini CEO, Stefano Domenicali, said that sales and orders for the Lamborghini Urus, which starts at $200,000 but usually sells for $240,000 or more with options, have been "terrific." He said, "We were expecting a positive feedback from the customer, but not at the level we are receiving now. The reaction of the customer is really fantastic." Specifically, he said the company will end 2018 with total production of around 5,000 cars – more than 1,000 of which will be the Urus. By the end of 2019, Lambo will be producing around 8,000 cars – with more than half being the SUV. He said 70 percent of buyers of the Urus are new to the brand, meaning they have never owned a Lambo before. He said he is also surprised by how many of the buyers are women. Read more here

See You in Las Vegas AIADA's
48th Annual Meeting and Luncheon, held March 25 in Las Vegas, is your chance to gather with likeminded leaders to consider what the future looks like for your businesses.
During the meeting, we'll introduce AIADA's 2018 Chairman, Volkswagen dealer Brad Strong of Utah, and recognize the winners of both of our annual awards – the David F. Mungenast Lifetime Achievement Award and the Fritz Hitchcock Grassroots Award. Finally, we'll hear from Volkswagen of America President and CEO Hinrich J. Woebcken on the state of our industry and the challenges he sees in the coming years.   

If you plan to attend NADA's convention this month in Las Vegas, please add AIADA's 48th Annual Meeting and Luncheon, held Sunday, March 25, to your schedule. You can register for the meeting by clicking here or by calling 1-800-GO-AIADA

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