Trump Promises Imported Car Tariff Decision 'Very Soon'

First Up 11/14/19

Daimler Targets $1.1 Billion in Savings with Mercedes Job Cuts
Daimler CEO Ola Kallenius is facing investors face-to-face at his first big strategy presentation since taking charge of the automaker in May. According to Automotive News, Daimler plans to slash headcount at its Mercedes-Benz cars division to help manage the disruptive shift to self-driving and electric vehicles. The job cuts are aimed at saving more than 1 billion euros ($1.1 billion) by the end of 2022, Daimler said Thursday. The Stuttgart-based automaker plans to eliminate 10 percent of management positions as part of the effort to boost results. After two rapid-fire profit warnings earlier this year, new CEO Ola Kallenius is under pressure to map out a strategy to revive flagging earnings, while at the same time ensuring that Daimler doesn’t lose its technology edge. A costly transition to electric vehicles, together with legacy diesel issues, has forced Mercedes to drop its EBIT margin outlook to a 3 percent to 5 percent range for 2019. With global demand for cars softening, Daimler has little choice but to cut costs to eventually return Mercedes’ profitability to its long-standing range of 8 percent to 10 percent. Read more here. 

Trump Promises Imported Car Tariff Decision 'Very Soon'
President Donald Trump said Wednesday he will make a decision shortly about whether to impose tariffs of up to 25% on imports of autos and parts. Automakers have said that such taxes could weaken the economy and put jobs of U.S. workers at risk. "I will make a decision fairly soon." Trump said. "I’ve been fully briefed. I’ll make a decision very soon.” According to The Detroit News, the president is facing a Nov. 17 deadline for placing tariffs on imported vehicles and car parts after a determination in May from the U.S. Commerce Department that such products propose a national security threat, clearing the way for tariffs as high as 25%. A section of federal law allows the president to unilaterally impose duties to protect the nation from security threats.  The Commerce Department's findings came despite staunch opposition from both Detroit manufacturers and foreign-owned carmakers. Read more here.  

Auto Borrowing Rises Amid Low Interest Rates, Solid Economy
Americans are borrowing more for cars, a sign lower interest rates and a decadelong economic expansion are supporting purchases of large household items, reports The Wall Street Journal. Auto-loan originations increased to $159 billion in the third quarter to the second highest level on record, according to a report released Wednesday by the Federal Reserve Bank of New York. Auto debt now accounts for nearly 10% of overall household debt, up from about 6% when the recession ended in mid-2009. Auto sales rose rapidly following the recession and have remained at a high level as the economic expansion has rolled on. “People are buying better quality, more durable cars which last longer but they cost more,” said Bronson Argyle, a professor at Brigham Young University in Provo, Utah. “Car prices are going up, so household auto debt is increasing,” Read more here (subscription required). 

New Vehicle Buyers Still Older Demographic, Study Shows
Older drivers still are the powerhouse when it comes to auto sales. One of the hot topics in the automobile business for nearly a decade has been the discussion around when younger buyers will start buying new cars. However, reports The Detroit Bureau, new research from Sivak Applied Research, which was founded by Michael Sivak, a former researcher with the University of Michigan Transportation Research Institute, reveals that more than half of all new vehicles in the U.S. are now purchased by people 55 years old and older. The percentage of new vehicles sold to younger buyers older than 54 is now larger than it was only a decade ago. In 2007, a majority of buyers (53%) were age 35 to 54, while in 2017 a majority (52%) were age 55 and older. In short, baby boomers still buy the majority of new vehicles in the United States. Sivak’s study found that middle-aged persons purchased proportionally fewer vehicles in 2017 than they did in 2007. The percentage of new vehicle buyers aged 35 to 44 dropped from 29% to 14% and from 24% to 20% for buyers 45 to 54. Read more here. 

Hyundai Greenlights Santa Cruz Pickup
Hyundai has given the go to build a new compact pickup truck, a version of the Santa Cruz concept from the 2015 Detroit Auto Show, at its Montgomery, Alabama assembly plant. According to CNBC, finding a place to build Santa Cruz was one of the biggest challenges delaying the project, according to a senior Hyundai official. The automaker will spend $410 million to expand the Montgomery plant which, in recent years, has struggled to keep up with demand for Hyundai products like the newly redesigned Santa Fe SUV. Adding Santa Cruz will create 200 direct jobs at the plant and another 1,000 for regional suppliers, the Korean carmaker said Wednesday. If Santa Cruz were built today, it would become the smallest pickup on the market. With it, several Hyundai officials have said, they hope to recreate at least some of the success classic compact trucks, like the 1970s-era Chevrolet Luv, had attracting first-time baby boom buyers. Read more here. 

Webinar: How to Protect Your Used Car Margins
AutoTalk's car gurus are back! 

On Tuesday, November 19th at 2:00 p.m. EST, tune in as Bob Grill, Carfax Senior Partner Development Manager, along with Automotive Consultant Mike Rossman deliver a robust presentation detailing how to:

  • Drive buyers, not just traffic

  • Create better listing descriptions

  • Skillfully win more trades

  • Increase your closing ratio while holding your gross margins

To register, click here. 

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