Unsold Vehicles Hit Ten Year High in May

First Up 05/14/19

Chairman's Blog: One Year In – And No Sign of an Auto Tariff Resolution
AIADA Chairman Howard Hakes writes in today’s Hakes’ Takes blog post that while new tariffs on Chinese goods, which will indeed the auto sector, are in the spotlight this week, those of us in the auto industry are still carefully watching another trade crisis unfold: This week, we will hit the 90 day mark from when the Department of Commerce submitted to the White House the results of its national security investigation into imported autos and auto parts. Thanks to the hard work of dealers who attended our AIADA fly-in last month and urged their legislators to sign onto a letter condemning the 232 tariffs, last week 159 Members of Congress sent a bipartisan letter to Economic Policy Council Director Larry Kudlow, urging the Administration not to damage the auto industry and the U.S. economy by imposing harmful tariffs. For this upcoming anniversary of the (insulting) national security investigation into our products, dealers want, and deserve, official acknowledgement that our stores and our products are NO threat to the American way of life. We need a commitment from President Trump that auto tariffs - a massive tax hike on Americans looking for safe transportation – are off the table. That would be the best anniversary gift of all. Read more here.  

U.S. Targets $300B of Chinese Goods for New Tariff Hikes
U.S. officials are targeting a $300 billion list of additional Chinese imports including laptop computers for tariff hikes, ratcheting up a trade fight that is shaking financial markets and fueling fears about global economic growth. According to ABC News, the release followed Beijing's announcement Monday of tariffs of up to 25 percent on $60 billion of American imports in their spiraling dispute over Chinese technology ambitions and other irritants. The list of 3,805 product categories is a step toward carrying out President Donald Trump's May 5 threat to extend punitive 25 percent duties to all Chinese imports, the U.S. Trade Representative announced. It said a June 17 hearing would be held before Washington decides how to proceed. The list "covers essentially all products" not already affected by punitive tariffs, the USTR said. It includes laptop computers, saw blades, turbine parts, tuna and garlic. The USTR noted it excludes pharmaceuticals and rare earths minerals used in electronics and batteries. Read more here.  

Unsold Vehicles Hit Ten Year High in May
The high number of unsold vehicles across the industry retreated slightly last month, but slowing sales in April meant dealers and automakers started May with their highest days supply for this time of year since 2009. Automotive News reports that automakers and dealers had an estimated 4,120,900 unsold vehicles on hand to open May, a 78-day supply. That's 67,300 vehicles fewer than at the beginning of April, which meant a 70-day supply of cars and light trucks, but 18,800 more than where the industry stood a year ago. The estimated 78-day supply was the highest number for what is traditionally the start of the summer selling season since it reached 85 days in 2009. Cars represented just over 26 percent of vehicles in inventory to open the month, while making up almost 30 percent of sales volume in April. As a result, dealers and automakers began May with just a 69-day supply of unsold cars, compared with an 81-day supply of light trucks. Just over half of the total unsold cars and light trucks in the U.S. at the beginning of May were either General Motors, Ford, or FCA products, while another third were from Japanese brands. Read more here.  

Shares of Mercedes-Maker Daimler Fall as Rumors Fly of a Chinese Stake Build-Up
Shares of Daimler dipped Monday following a report that a Chinese partner firm is building a stake in the German automaker, reports CNBC. Reuters reported Friday, citing three sources familiar with the matter, that China’s Beijing Automotive Industry Holding Co. (BAIC) has been buying up shares in the Mercedes-Benz carmaker on the open market, with a view to consolidating a stake of around 4 percent to 5 percent. Shares of Daimler are up 20 percent so far in 2019, but retreated around 3 percent Monday amid a wider sell-off for European benchmarks. Building a 5 percent stake in Daimler at its current stock value would cost a buyer around $3.4 billion. BAIC builds Mercedes cars in China through their joint venture, Beijing Benz Automotive. Daimler has reportedly been looking to secure a controlling interest in the alliance. Read more here. 

Mercedes-Benz Will Make Entire Car Fleet Carbon-Neutral by 2039
German carmaker Mercedes-Benz pledged this week to decarbonize its new passenger car fleet within two decades – far earlier than what would be required under European Union law. According to Forbes, the timeframe is the most ambitious out of a number of similar pledges made by European automakers recently, most notably Volkswagen's pledge in March to be carbon neutral by 2050. Volkswagen also pledged to launch 70 new electric car models within the next decade and have such vehicles make up at least 40 percent of its total sales by 2040. The Mercedes plan is being called “Ambition2039”, the date by which the automaker’s passenger car fleet will be carbon neutral. It also sets a target of making electric vehicles make up at least 50 percent of its sales by 2030. A big part of making the fleet carbon neutral is focusing on how to decarbonize the factories that make the cars. Read more here. 

Federated Insurance's Claim of the Month – Could It Happen to You?
While delivering a car to a dealership in another city, an independent driver failed to stop at a stop sign, causing an accident that injured two people in the other car. The driver was ruled at fault.

CLAIM AMOUNT: Over $850,000

Auto claims can be tricky to understand for a policyholder. Whose insurance covers losses — the driver or the vehicle’s owner? Here are some practices to consider before releasing a vehicle to a driver who is not directly employed by your business. These practices can help protect you in the event the contracted driver is involved in a crash in a vehicle your business owns.

  • Check to make sure the contracted driver or the business that the driver is working for has insurance.

  • Determine if the driver or the driver’s company’s policy is primary or in excess of your policy.

  • Consider securing a written indemnity agreement with the driver. 

  • Secure a certificate of insurance from the driver’s carrier.

If you have questions about your coverage in a given situation, get in contact with your insurance carrier to help ensure you understand how you’re protected — and how you aren’t.

Visit federatedinsurance.com or contact your local marketing representative for resources you can use to create or enhance your own risk. 

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How Toyota and BMW Teamed Up to Develop New Z4, Supra [The Detroit Bureau]

Lost Lamborghini from 'The Italian Job' is Found, Restored After 50 Years [USA Today]