U.S. Zeroes in on Europe's Cars in Battle to Fix Trade Deficit

First Up 05/13/19

U.S. Zeroes in on Europe's Cars in Battle to Fix Trade Deficit
Commerce Secretary Wilbur Ross said autos share equal blame with China for the U.S. trade deficit, an indication that European carmakers like Volkswagen AG and BMW AG could soon be hit with tariffs, reports Bloomberg. “The reason autos are very important to our trade picture is about half of our trade deficit comes from the single product, automotive, and about the other half of our trade deficit comes from a geographic area and that’s called China,” Ross said at a press conference in Luxembourg on Friday. The Commerce Department sent Donald Trump its findings of a probe into the national-security risks of auto imports in February. Ross said he expects the U.S. president to rule on tariffs by May 18. Levies on cars and parts imported to the U.S. would especially hit Germany, and the European Union has vowed to retaliate. Ross made it clear that the country’s trade balance is the driving motive behind the focus on the auto industry. Read more here. 

Bloomberg also reports that the European Union is finalizing a list of American goods to target with retaliatory tariffs in the event that U.S. President Donald Trump imposes levies on car imports. “We are already preparing a list of possible items that would be on that list,” EU trade chief Cecilia Malmstrom said in a Bloomberg Television interview on Monday. “The moment this is official -- if this happens, I still hope it won’t – then we would publish that list,” she said, adding that it would “happen quite rapidly.” Read more here. 

No Room at U.S. Plant for Mercedes to Make C Class
In a move that speaks volumes about the evolution of Mercedes-Benz and U.S. consumers, the luxury automaker is considering booting its best-selling sedan out of U.S. production, say sources familiar with the situation, to make way for the vehicles Americans want most — light trucks. Automotive News reports that where and when the C class will move are unclear, and Mercedes executives have declined to comment on the plan, which forecasters believe will come as early as next year. Mercedes spent nearly five years moving the C class into production at its sole U.S. factory, in Vance, Ala. Now, just five years later, the sedan appears headed out of America — a casualty of shifting U.S. consumer trends. According to industry forecaster LMC Automotive, C-class sedan production in Vance will end in the fourth quarter of 2020. Read more here. 

To Save the Dying Sedan, Automakers Steal Key Features from SUVs
All-wheel drive sedans used to be a niche market limited to park rangers and uptight snow-belt drivers. These days, they’re becoming a more popular choice for decidedly mainstream models, reports The Detroit News. The latest entrants to the all-wheel stable include the Mazda6, Nissan Altima, and Toyota Prius. As sales of crossovers, sport utility vehicles and pickups have grown, automakers are equipping more of their sedans with all-wheel drive to hang onto buyers wanting more SUV-like features. All-wheel or four-wheel drive is standard on most SUVs and trucks, helping to boost its availability to a record 63.4 percent of new vehicles sold last year, up from 56.4 percent a decade ago, according to data from Edmunds. Automakers are betting that by passing these powertrain variants on to passenger cars, they’ll be able to prop up their sagging sales. Read more here. 

F&I Continues to Be a Sweet Spot for Biggest Dealers
Even as expenses escalate, margins narrow and sales volume declines, dealers continue to find strength in their finance and insurance departments, reports Automotive News. F&I revenue per vehicle and overall F&I revenue rose for most of the 150 largest dealership groups in the U.S. in 2018, according to an Automotive News survey. Average F&I revenue per new and used vehicle retailed increased 4.6 percent, to $1,482, according to the survey. Automotive News' sixth annual F&I survey examined the F&I results of the nation's top 150 dealership groups, as ranked by new-vehicle retail sales in 2018. Of those, the survey looked at 144 groups that provided finance data for 2017 and 2018. Total F&I revenue for the dealership groups increased 7.5 percent compared with the year earlier. In 2017, F&I revenue rose 6 percent. Read more here. 

Despite Deaths, Injuries, and Recalls, Air Bags Still Save Lives
Properly functioning air bags greatly increase the odds of surviving a severe crash, especially if the driver follows other basic safety rules, reports The Detroit Free Press. If people get a recall notice for a defective air bag, safety experts say it is critical to go to a dealership and get it repaired, which is free, as soon as possible. Frontal air bags have been standard equipment in all cars since model year 1998 and in all SUVs, pickups and vans since model year 1999.  Air bags reduce the chance of an upper body or head injury during a crash. According to NHTSA data, in frontal crashes, frontal air bags reduce driver fatalities by 29 percent and fatalities of front-seat passengers age 13 and older by 32 percent. NHTSA estimates that the combination of an air bag plus a seat belt reduces the risk of death in frontal crashes by 61 percent. From 1987-2015, frontal air bags saved 44,869 lives. In 2016, air bags are estimated to have saved 2,756 people. Read more here. 

Webinar: Let Go and Let Google 
Join Google's Senior Automotive Retail Strategist, Kelly McNearney, on Tuesday, May 21st at 2:00pm EDT as she demonstrates how to drive more dealership visits using Google machine learning. Kelly will discuss how dealers need to "let go" of traditional marketing and "let Google" use advanced algorithms, machine learning and data to bring their business into the digital age. To register, click here.

Around the Web

Prince Harry Got a Close Look at Land Rover's New Baby, the 2021 Defender [MotorAuthority]

The 12 Quickest Cars That Get 40 MPG or Higher on the Highway [MotorTrend]

Bentley Continental GT 'Ultratank' Makes Tracks in Russia [Autoblog]

Review: The 2020 Toyota Supra Was Worth the Long Wait [CNBC]