So about these possible Tariffs on Automakers...

[spwolf]

People seem to forget or gloss over how much we protect our markets as well.

We carry a 25% duty on trucks and this is to protect the largest truck market in the world, us. In reality, percentage-wise, our 2.5% on cars and 25% on trucks outweighs what the euro's do all around at what, 10%? There's a lot more at stake with our lucrative truck market versus cars in Europe in my opinion.

I'm not sure how Ford or Chevy would feel if that duty fell to the wayside.

So, there's some hypocrisy going around.

thats not really true, because Europe charges a lot more taxes due to that 10%,, while chicken tax is barely ever applied (is it ever?), since big trucks are not specialty of Europeans. So if you look at the balance sheet, Europe exports a lot more vehicles to the USA than it imports, precisely because they have had 10% custom fee for decades.

I would love it if result is that car taxes are abolished between EU and USA, and this seems to be a plan... German manufacturers are also calling for cutting the import tax in EU completely due to this.

 

[Joaquin Ruhi]

Mazda becomes, to my knowledge, the second import car company (after Toyota) to speak out against the so-called "Section 232" possible tariff increase:

MAZDA STATEMENT ON FILING OF COMMENTS ON COMMERCE DEPARTMENT SECTION 232 INVESTIGATION
June 28, 2018

WASHINGTON, DC (June 28, 2018) – On behalf of the 32,000 Americans who support their families working for Mazda and Mazda dealerships across America, today we filed comments on the Commerce Department’s Section 232 investigation of automotive imports as a possible national security threat. The result of this investigation could be a 25% tariff on the import of automobiles and automobile parts. A tariff is a tax and it will be paid by American consumers. It will significantly increase the cost of every new vehicle sold in America, regardless of where it is built. As Mazda begins construction of our new auto factory in Huntsville, Alabama, we urge the Commerce Department to reject the premise that auto imports are a threat to national security.

https://insidemazda.mazdausa.com/pr...ommerce-department-section-232-investigation/

 

[Joaquin Ruhi]

Toyota's official reaction:
http://pressroom.lexus.com/releases/toyota+statement+on+proposed+tariff+on+vehicle+imports.htm

That's just the tip of the iceberg. Stephen Ciccone, Toyota's Group Vice President of Government Affairs drafted a 15-page document reminding the U.S. Commerce Department, in great detail, about the carmaker's broad-based contributions to the American economy. This link will lead you to the full PDF document:

http://pressroom.lexus.com/releases/toyota+public+comments+on+section+232+investigation.htm

And, if you don't care to read all 15 pages, a third Toyota news release points out a summary of the highlights contained therein:

Toyota Submits Comments on Proposed Import Tariffs to Commerce Department
June 29, 2018
Toyota Motor North America today filed comments with the U.S. Commerce Department on its Section 232 investigation on the national security implications of imported vehicles and parts. Key excerpts from the company’s comments are below. Toyota’s full submission can be found here.

Importance of fair trade:

• “Free and fair trade is the best way to create sustained growth for the auto industry, employment opportunities for American workers and provide more choice and greater value for American consumers. Erecting trade barriers, like import tariffs, will ultimately invite retaliation from other nations and undermine America’s leadership, exports and competitiveness overseas. Toyota stands ready to work with the Administration to advance opportunities that remove such barriers, promote economic growth and strengthen national security.”

Auto industry Impact:

• “Tariffs on imported parts will disrupt U.S.-based production of motor vehicles, since it will deprive our U.S. manufacturing plants of key parts and components. Like most global automakers, including the Detroit-based companies, Toyota sources most key parts and components locally, e.g. engines and chassis, but also imports certain specialized parts and components. There is no vehicle in the United States, whether from Toyota, GM, Ford, FCA, Daimler or Hyundai, that is sole-sourced from exclusively U.S. parts and components.”

Consumer Impact:

• “A potential tariff on automobiles and parts would have a negative impact on all manufacturers, increasing the cost of imported vehicles as well as domestically produced vehicles that rely on imported parts. To give a Toyota example, the Camry is built in Kentucky, and has been the best-selling car in America for 19 of the last 20 years and one of the best American-made cars you can buy. But even the Camry has about 30% non-U.S. content. This means the Camry would see a cost increase of $1,800 (based on a price of $23,645). Ultimately, this cost will likely be passed along to consumers in the form of higher prices.”

Trading partners:
“Closing the U.S. market to imported autos would open the door for other countries to use “economic security” arguments disguised as “national security” arguments to impose tariffs on U.S. products to protect their domestic companies against a host of U.S. manufactured exports and farm products. Engaging in trade wars with our allies would diminish, not enhance, U.S. national security, jobs and prosperity, and undermine the rules-based global trading system, which has led to a period of unparalleled peace and prosperity in Europe and Asia for the last half century.”

http://pressroom.lexus.com/releases...sed+import+tariffs+to+commerce+department.htm

 

[mikeavelli]

GM's CEO had a pretty blunt statement as well. It will hurt GM and jobs period. Usually they are pretty even keen on politics (for public display).

As I'm in the industry everyone is worried quite a bit how it will effect them, including suppliers and us in the aftermarket industry.

 

[mmcartalk]

I have to disagree with some of the statements here from the manufacturers....it appears to be a scare tactic. I don't think the current market is going to allow them to raise list prices on tariff-affected vehicles here in North America, even if their own costs rise because of the tariff. Consumers will just refuse to pay the added price. Like it or not, IMO there is only one way the companies are going to (reasonably) get around the effect of these tariffs.....and that is to simply bite the bullet and bring the jobs and manufacturing back home. It will simply become too costly and difficult for them to produce the same vehicles overseas....which is apparently what Trump intends, and I agree.....I think it is going to work.

 

[Ian Schmidt]

Like it or not, IMO there is only one way the companies are going to (reasonably) get around the effect of these tariffs.....and that is to simply bite the bullet and bring the jobs and manufacturing back home. It will simply become too costly and difficult for them to produce the same vehicles overseas....which is apparently what Trump intends, and I agree.....I think it is going to work.

Yeah. I think the President's first goal is to get our friends to stop overcharging for our stuff, and failing that to bring more manufacturing to the US, all the way down the supply chain. There are already some cost and logistics advantages to doing final assembly here, which is why Toyota, BMW, Mercedes, VW, and Honda all do it. If you can also get the component parts overnighted from 3 states over instead of from Shenzhen you're both saving money and reducing carbon emissions.

 

[Joaquin Ruhi]

Toyota's latest statement on the threatened U.S. tariffs:

Toyota Production Workers Oppose Tariffs
July 19, 2018
WASHINGTON (July 19, 2018) —Dozens of employees from Toyota’s 10 U.S. assembly plants were in Washington, D.C., today to oppose the government’s threat to impose a 25% tariff on imported vehicles and parts. They were joined by U.S. production workers from other international automakers across the country. To draw attention to the automakers’ U.S.-built vehicles, a caravan of cars and trucks circled the Capitol during a Commerce Department hearing examining whether auto imports are a “threat to national security.” Toyota exports eight of its U.S. models to 31 countries. If tariffs are imposed, Toyota estimates the cost of the Kentucky-built Toyota Camry will increase by $1,800, the Texas-built Tundra truck by $2,800 and the Indiana-built Sienna minivan by $3,000. The government is expected to decide later this year on whether to impose tariffs.

http://toyotanews.pressroom.toyota.com/releases/toyota+production+workers+oppose+tariffs.htm

 

[Tragic Bronson]

Toyota might stop importing certain models if tariffs imposed
Prices would probably increase, too

In case you hadn't heard, the entire automotive industry, both domestic and foreign, is very much against the automotive tariffs proposed by the Trump administration. And while the industry is lobbying hard against such tariffs, companies are also having to consider what to do in the event they are passed. CEO of Toyota's North American operations, Jim Lentz, told Bloomberg that the company will certainly be reconsidering its strategy in the event of tariffs between 10 and 25 percent the cost of the car. He told the news outlet that, depending on how high the tariffs are, Toyota might just increase the price of some models, or stop importing them altogether.

Toyota does build a large number of its cars here in the United States. The Toyota Camry, Avalon, Tundra, Highlander, Sequoia, Sienna models are all built here, as well as some Tacomas, Corolla sedans, and Lexus ES sedans. Many of those vehicles are big sellers for Toyota, too, so that's good for the company.

But many other Toyotas are built outside the country. The Toyota RAV4, Prius range, C-HR, Corolla hatchback, Land Cruiser, 86, Yaris, Yaris sedan, Mirai, 4Runner, and the entire Lexus line are built in other countries.

Some of these imports we're sure are safe no matter how high the tariffs might be. The RAV4 is the company's biggest seller, and the Prius sells well, too. Even if the Prius wasn't selling so well, the company would probably still sell it simply because it's an image builder. Somewhat related, we imagine Toyota would continue offering a handful of Mirais. The 4Runner, C-HR and Corolla hatchback would probably be safe, too. If these models stick around after potential tariffs are imposed, expect their prices to increase.

But in the Toyota line, anything that's not selling well and has tight margins is probably doomed. Chief among them are the French-built Yaris hatchback and the Mexican-built Yaris iA sedan. Both cars have terrible sales, and being low-end cheap cars, they'll only sell worse with higher prices, and Toyota will lose money if it has to eat the tariff. The 86 is a similar situation in which it's a niche vehicle that has had weak sales and is being sold at a relatively low price. The Land Cruiser could go either way. It sells in small numbers, but it's already extremely expensive and continues to sell. Buyers might not be put off by spending some more.

Moving over to the Lexus side of things, mainstream models are undoubtedly safe such as the IS, GS and LS sedans, and especially the NX, RX, GX and LX SUVs. The RC and LC coupes might be in a tough spot because their sales are pretty small compared with the other models. But as luxury products, they all may have some room to increase prices somewhat. We'll have to see what happens with tariffs to have a better sense of the particular impact on Toyota and Lexus.