Will Mini Stores Move in with BMW?

First Up 11/05/18

Japan's Automakers Wonder How to Go More 'Local' Under USMCA
North America's automakers all face a new reality of sourcing vehicle content under the free-trade deal agreed to by the U.S., Canada, and Mexico, reports Automotive News. But for Japan's auto companies, the moment is particularly worrisome. After decades of building vehicles in relative stability in North America and spending billions of dollars to move factory capacity and suppliers from Japan, the Japanese now must re-examine their supply chains and plant investments to make sure they can meet the local- content rules of the United States-Mexico-Canada Agreement. That free-trade plan raises the portion of vehicle content that must originate within the region to 75 percent, from 62.5 percent, to sidestep tariffs, and it requires at least 40 percent of a vehicle to be built by workers whose pay averages more than $16 per hour. It also requires that 70 percent of steel and aluminum be purchased in-region. Read more here. 

Ford, Volkswagen Mulling Global Self-Driving Partnership
Ford Motor Co. and Volkswagen AG are discussing a global partnership on self-driving vehicles that would align two of the world's largest automakers behind one of the biggest bets on the future of the auto industry. According to The Detroit News, the companies have been exploring a partnership on autonomous vehicles as part of talks that began earlier this year. Any alliance would not include cross-shareholding, or a merger, of the parent companies, the automakers have stressed. The discussions intensified after the companies in June signed a memorandum of understanding to explore how and whether Ford and VW could co-develop commercial vehicles, which could play a role in a self-driving vehicle partnership. Volkswagen would piggyback on Dearborn-based Ford's market penetration in North America. It also would gain access to the Pittsburgh-based Argo AI, the company in which Ford invested $1 billion to develop software for its autonomous vehicle system. Read more here. 

Will Mini Stores Move in with BMW?
Sluggish sales for Mini have become a crisis. To overcome Mini's meager product pipeline and stem dealer losses, BMW of North America confirms it is considering letting Mini dealers move operations into their BMW stores, reports Automotive News. That could help Mini dealers defray operating costs and real estate overhead by sharing backroom expenses. But not every Mini dealer is a BMW dealer. A decision has not been made, but the change would end Mini's insistence on a separate high-profile identity. "As a dealer and a manufacturer you have a vision of where the brand is going, and you have to prepare for it," Jason Willis, a member of the Mini National Dealer Council, told Automotive News. "You've got a small product line — all small cars — in a strong SUV market," said Willis, general manager of fixed operations at Willis Auto Campus in Des Moines, Iowa. "Our product doesn't match the demand." Read more here. 

Japan's Subaru Recalls More Cars, Slashes Guidance as Cheating Issue Widens
Japan’s Subaru Corp said it would recall more vehicles sold in the domestic market on new cases of inspection cheating, and cautioned that rising recall costs would lop off about a quarter from its annual profit forecast. According to Reuters, shares in Subaru, already reeling from a series of recalls for issues ranging from faulty components to inspection do-overs, fell 5 percent to a four-year low on Monday after news of the fresh recalls and the bleak outlook. The company, the smallest among Japan’s major automakers, said it would recall around 100,000 vehicles, including its popular Impreza sedan after discovering that final tests for components including brakes were not conducted properly. Vehicles sold overseas will not be affected. The automaker expects to incur 6.5 billion yen ($57 million) in costs related to the latest recall. This, along with other quality-linked issues, is expected to push Subaru’s operating profit to 220 billion yen in the year to March 2019. It had previously forecast a 300 billion yen profit. Read more here. 

Luxury Car Owners Trade Up for American Pickups
While trucks have traditionally been the sort of vehicles you'd expect to see on a farm or at a work site, demand has been surging among regular buyers who are opting out of sedans and coupes and replacing their family vehicles with pickups and SUVs, reports CNBC. High-line products might seem to be running counter to current industry trends. "Affordability may be the canary in the coal mine," warned Jeff Schuster, chief global vehicle forecaster at LMC Automotive ahead of the release of October's new vehicle sales numbers. But it's largely at the low end of the market where cost pressures are hitting hardest, Tyson Jominy, the managing director of data and analytics for J.D. Power, noted that sales of vehicles priced under $20,000 are off by about 20 percent for the first 10 months of 2018. As you move up the price ladder, however, the fall-off recedes. And, among vehicles priced above $80,000, "sales are up 25 percent," he said. Read more here. 

Beltway Talk Podcast: Midterm Madness
With one day left before the 2018 midterms, Beltway Talk host Hannah Oliver sat down with Rachel Robinson – Capitol Hill veteran and vice president of AIADA’s government relations department – to find out what issues and candidates on the ballot will most impact dealers. One thing we know for sure: dealers must vote! Click here to listen to the Midterm Madness edition of Beltway Talk. And, make sure to subscribe to the podcast to hear more episodes as they’re released. 

Around the Web

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