U.S. Auto Sales Face Tough Slog to the Finish Line

First Up 09/10/18

U.S. Auto Sales Face Tough Slog to the Finish Line
Two-thirds of the way through 2018, U.S. auto sales are up 1.1 percent. But, despite a healthy and growing economy, virtually no one who tracks the industry projects the year to end better than 2017. According to Automotive News, that means these next four months are shaping up to be a tough slog to the finish line for automakers — and a test of executives' ability to suppress their instinct to open up the incentive spigot as dealership traffic fades. "Given all the positive economic news, including a high stock market and low unemployment rates, we might have expected even more, particularly compared to last August which was negatively impacted by Hurricane Harvey," Charlie Chesbrough, senior economist for Cox Automotive, said in a statement. "This is why we believe all the positive economic news can't overtake the worsening buying conditions for consumers: The economy may be peaking right now, but the vehicle market likely peaked two years ago." Read more here.  

Congress Resists Reining in Trump on Trade
On Capitol Hill, where constitutional power to check the presidency lies, many lawmakers are unnerved by the Trump administration's aggressive trade moves — including tariffs on steel and aluminum, Chinese goods, and potentially autos and auto parts — as well as the impact of retaliation by trading partners on U.S. exports. But, reports Automotive News, their expressions of unease haven't been matched by substantive action. Representatives from auto states want the president to preserve NAFTA and the regional supply chains it supports, and fear the impact of a trade war on foreign automakers that export from the U.S. At a Senate hearing last week on auto tariffs, every senator — Republican and Democrat — expressed misgivings about the White House approach on trade, which was variously described as "scattershot," unpredictable, inconsistent, and vague. Congress has "authority over tariffs and taxes," John Bozzella, president of the Association of Global Automakers, testified before lawmakers last week. "You should make sure the administration is conducting itself in the way it was intended." Read more here. 

Few Carmakers Submit Self-Driving Car Safety Reports
The Trump administration has asked automakers to voluntarily outline how they are developing and testing self-driving cars on public roads. But only three companies have complied, reports The Detroit News. Safety advocates say reports that have been submitted so far — by General Motors Co., Ford Motor Co., and the Google-affiliated Waymo, according to the National Highway Traffic Safety Administration — resemble slick marketing brochures instead of stringent regulatory filings.  Critics say the self-driving assessments should be mandatory to ensure compliance from all automakers. They also say the paperwork already voluntarily submitted does little to reassure the driving public that vigorous testing is being done, an answer to polls showing increasing unease about self-driving cars. “As awareness around the development of autonomous technology increases, we’re seeing some dramatic shifts in consumer sentiment,” said Karl Brauer, executive publisher of Cox Automotive’s Autotrader and Kelley Blue Book, in a statement accompanying a recent report on the evolution of autonomy. Read more here. 

Ford Responds to Trump Tweet on Focus
Auto analysts groaned on Sunday in response to tweets sent by President Trump that touted his tariffs on Chinese imports and his claim that the trade war would inspire Ford Motor Co. to build its Ford Active crossover in the U.S. rather than overseas. Wrong, Ford said. According to The Detroit Free Press, the Dearborn-based company issued a statement in response to the president's tweet: “It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment. Ford is proud to employ more U.S. hourly workers and build more vehicles in the U.S. than any other automaker." Ford on Aug. 31 canceled plans to import the Focus Active crossover from China to the United States because of costs from the escalating trade war. The Focus Active was meant to take the place of the Ford Focus in the U.S. because Ford is phasing out the entry-level car as it shifts its production to pickups and SUVs. Focus Active was scheduled to go on sale in the late summer of 2019. Read more here.  

Toyota to Resume Japan Production Halted After Earthquake
Toyota Motor Corp. said it would restart vehicle production in Japan on Tuesday after suspending production in the wake of a major earthquake. According to The Wall Street Journal, the economy is gradually returning to normal in Hokkaido, the northern island hit by Thursday’s magnitude-6.6 earthquake. The quake knocked offline the largest working power plant in the region, home to about five million people and a key Toyota plant for engine parts and transmissions. The sudden loss of power led to a blackout across Hokkaido, forcing the Toyota plant to shut down and disrupting the supply of components to Toyota’s factories across the country. The disaster underlined the vulnerability of the supply chain to natural disasters. By Monday morning, power was restored to all but a few hundred households. Toyota said the Hokkaido plant would resume parts production Monday night, and all 16 of its plants nationwide are to resume production by Thursday. Read more here. 

Around the Web

Cox Automotive Dealer Sentiment Index [Cox Automotive]

Here Are the Best Cars of 2018 [Business Insider]

28 Best Choices for a New First Car [U.S. News & World Report]

20 Must-See New Cars Coming In Next 12 Months [Detroit Free Press]

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