Automobiles
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FILE PHOTO: The logo of French car manufacturer Renault is seen at a dealership of the company in Illkirch-Graffenstaden near Strasbourg, France, January 10, 2019. REUTERS/Vincent Kessler/File Photo
March 27, 2019
(Reuters) – France’s Renault SA intends to restart merger talks with Japanese automaker Nissan Motor Co Ltd within 12 months, after which it will set sight on a bid to buy Fiat Chrysler Automobiles NV, the Financial Times reported on Wednesday, citing sources.
Renault and Fiat did not immediately respond to Reuters’ requests for comments. Nissan said it did not comment on rumors.
(Reporting by Kanishka Singh in Bengaluru; Editing by Subhranshu Sahu)
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FILE PHOTO: A man holds an electric car charger in a car park at a McDonald’s restaurant in Sao Paulo, Brazil, March 3, 2018. REUTERS/Nacho Doce/File Photo
March 26, 2019
By Marcelo Rochabrun
SAO BERNARDO DO CAMPO, Brazil (Reuters) – Meeting in Brazil this week, auto executives from Toyota to GM talked up traditional fuel sources like ethanol, natural gas and diesel, underlining how South America’s protected auto market is likely to resist a broader global move toward electric vehicles for years to come.
Even as automakers revamp their global businesses to focus on electric cars in Europe, North America and Asia, executives who oversee production in Brazil and Argentina are still prioritizing internal combustion engines – in part because of subsidies for locally plentiful fuels.
“The future of Argentina’s energy is natural gas,” said Cristiano Rattazzi, who heads the country’s unit of Fiat Chrysler Automobiles, as well as its automakers trade group. He added that diesel fuel, out of favor in much of the world, also still has potential in Argentina.
Argentina’s natural gas production is expected to increase dramatically as foreign oil companies and state-owned YPF pour investment into Vaca Muerta, one of the world’s largest shale gas reserves.
Aurelio Santana, executive director of Brazil’s auto trade group, had similar things to say about ethanol, which powers many of Brazil’s cars.
“It’s very important that the government supports investments in research and development involving ethanol,” Santana said. “We need to maintain what we already have here.”
The desire to stick to what they know underscores the political sway of local energy producers. Recently, Brazil’s legislature issued a series of tax incentives, dubbed Rota 2030, which offer significant benefits to car makers who choose to invest in ethanol research.
The event took place in Sao Bernardo do Campo, the historic home of Brazil’s auto industry, which is still reeling from the shock earlier this year that Ford Motor Co would be shutting its plant in the city.
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Toyota Motor Corp is so far the only automaker to announce that it plans to make even a hybrid model in South America, featuring an engine that can run on electricity or either pure ethanol or gasoline.
“It’s the best solution for our region,” said Celso Simomura, Vice President for Toyota’s Brazil operation.
General Motors Co earlier this month announced an investment of 10 billion reais ($2.58 billion) in Brazil over the next five years, but none of that will go to electric cars, said Carlos Zarlenga, GM’s chief for South America.
GM will start importing electric vehicles this year to test the market, he added, but there are no plans yet to build them domestically.
Volkswagen AG’s top executive for South America and the Caribbean, Pablo Di Si, said the German automaker was going to import six electric or hybrid models to Brazil by 2023. But he also said there were no plans to produce them locally.
“In Latin America, we need to consider all the caveats,” Di Si said, pointing to the lack of a legal framework for electric vehicles and not enough charging infrastructure. Volkswagen wants to sell 1 million electric vehicles globally by 2025.
Fiat’s Rattazzi was confident that the old ways would survive in South America in the medium term.
“In 2030,” he predicted, “the combustion engine will still have a place.”
($1 = 3.8768 reais)
(Reporting by Marcelo Rochabrun; editing by Christian Plumb and Rosalba O’Brien)
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FILE PHOTO: Automobiles for sale are seen at Serramonte Volkswagen in Colma, California, U.S., October 3, 2017. REUTERS/Stephen Lam
March 26, 2019
(Reuters) – U.S. auto sales are expected to drop about 2.1 percent in March from a year earlier, partly due to bad weather, mixed economic data and lower tax refunds, according to industry consultants J.D. Power and LMC Automotive.
The consultancies expect total U.S. vehicle sales of about 1.56 million units in March.
Retail sales are expected to touch 1,195,000 units in March, a 3.4 percent decline from a year earlier, the consultancies said on Tuesday.
The first-quarter sales are off to its slowest start since 2013, according to the industry consultants, who estimate retail sales in the quarter to be about 2.94 million vehicles – a decline of 4.9 percent compared to the same period a year ago.
“This is the first time in six years that Q1 sales will fall short of 3 million units. While the volume story could be better, there is remarkable growth in transaction prices, with records being set monthly,” Thomas King, senior vice-president of the data and analytics division at J.D. Power, said.
However, average transaction price is on pace to reach $33,319, the highest ever for the first quarter and an increase of over $1,000 compared to the same period a year ago.
LMC Automotive also forecast total light-vehicle sales of 16.9 million units this year, a 2.2 percent fall from 2018.
Earlier this month, the Federal Reserve said U.S. manufacturing output fell for a second straight month in February, held down by decline in motor vehicles and parts output that edged down 0.1 percent in February, after falling 7.6 percent in January.
(Reporting by Rachit Vats in Bengaluru and Nick Carey in Detroit; Editing by James Emmanuel)
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FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) after the opening bell in New York, U.S., March 21, 2019. REUTERS/Lucas Jackson
March 22, 2019
By Amy Caren Daniel
(Reuters) – Wall Street’s main indexes were set to open lower on Friday after downbeat German data exacerbated fears of a slowdown in global growth following an abrupt dovish turn by the Federal Reserve earlier this week.
German manufacturing contracted further in March, showing its lowest reading since June 2013 and adding to worries that unresolved trade disputes were slowing down Europe’s biggest economy.
Another survey showed the Euro zone’s business growth was worse than expected in March as factory activity contracted at the fastest pace in nearly six years.
“Today’s economic numbers indicate the strong relationship that China has with Europe. China has been slowing down, especially in ordering industrial products and automobiles, and that is going to hit Germany out-proportionally,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh
“Moreover, the Fed’s action on Wednesday show that they don’t believe the economies of the world are strong enough to continue their raising program.”
The Fed on Wednesday abandoned projections for any interest rate hikes this year as policymakers see a U.S. economy that is rapidly losing momentum.
Rate-sensitive financial stocks were set to extend their three-day decline. Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co fell about 1 percent.
Adding to the uncertainty were concerns over trade after Bloomberg reported that U.S. officials downplayed the prospect of an imminent trade deal with China, just as U.S. trade delegates head to Beijing next week.
Chipmakers, which get a huge chunk of their revenue from China, fell in premarket trading. Micron Technology Inc, Intel Corp and Nvidia Corp declined between 0.4 percent and 1 percent.
Their shares rallied in previous session after Micron predicted a recovery in a memory market saddled with oversupply, as demand for mobile phones slows.
Nike Inc dropped 4.6 percent after the sportswear maker’s quarterly revenue failed to beat Wall Street estimates, as sales fell short of expectations in North America.
Nike’s partner Foot Locker Inc fell 3.7 percent.
At 8:15 a.m. ET, Dow e-minis were down 186 points, or 0.72 percent. S&P 500 e-minis were down 18.5 points, or 0.65 percent and Nasdaq 100 e-minis were down 44 points, or 0.58 percent.
In light of bleak factory data from Europe, investors will be watching for the U.S. Services Sector Final Purchasing Managers’ Index (PMI), which is likely to come in at 53.6 for March, compared with 53 for February. The report is due at 9:45 a.m. ET.
Tiffany & Co dropped 4.6 percent after the luxury retailer missed quarterly sales expectations, blaming low spending by Chinese tourists and weakness in Europe.
(Reporting by Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva)
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Success in politics — and in political predictions — depends on the ability to distinguish between old rules of thumb that don’t apply any more and old rules of thumb that do.
Take the old rule that an officeholder’s chances of re-election depend on what James Carville in 1992 took to calling “the economy, stupid.”
That used to be a real thing. The Great Depression took President Herbert Hoover down from 58 percent of the vote in 1928 to 40 percent in 1932. The return of economic growth enabled President Franklin Roosevelt to increase his 57 percent in 1932 to 61 percent in 1936, and then to win re-election twice in the shadow of World War II in the 1940s.
Amid recession, President Ronald Reagan’s job approval sunk to 41 percent in January 1983. Amid surging growth, it rose to 58 percent in October 1984. A month later, he won 59 percent of the popular vote and carried 49 states.
During President Donald Trump’s time in office, the economy has improved sharply, with record-low unemployment and — something not seen since Reagan’s time or before — with the biggest income gains for low earners. The public’s rating of the economy has improved sharply as well.
But Trump’s job approval has barely changed at all. After hitting a low of 37 percent in the RealClearPolitics average of public polls in December 2017, it has remained steady for more than a year, oscillating between 40 and 44 percent.
Analysts have attributed wobbles upward or downward to specific events. But given the inexactitude inevitable in polling, they may not represent any change at all. Trump’s numbers remain slightly below the high 40s, the pre-election-year approval numbers of recent presidents who have won a second term. But their approval numbers were closely tied to perceptions of the economy. Trump’s aren’t.
One reason old political rules stop working is that one generation of voters has different experiences from those of the generations before. Voters who remembered the Great Depression of the 1930s and World War II in the 1940s rewarded incumbent presidents who seemed to have produced prosperity and peace with landslide re-elections.
They were willing to cross party lines to express their gratitude for policies that seemed to prevent the horrors that were all too familiar. So incumbent presidents of both parties won between 57 and 61 percent of the popular vote in 1956, 1964, 1972 and 1984. Since 1988, only a shrinking sliver of voters remembers what Americans used to call “the depression” and “the war,” and no president has won more than 53 percent.
Just as Trump has not been able to raise his job rating to the improving economy, so his political enemies have not been able to lower it significantly. Each new supposedly shocking personal revelation has failed to shock; each eagerly whispered allegation of criminal collusion has failed to disenchant.
It’s apparent now that Trump’s support — the 21st-century Republican core minus a couple million white college grads, plus a couple million white non-grads — is sticking with him pretty much regardless of events or outcomes. And that the coalition that makes up the 21st-century Democrats, with the reverse adjustments, is solidly arrayed against.
This is actually in line with old political rules, rules with origins far before the 1930s and 1940s. The Republican Party, from its formation in 1854, has been built around a core of people considered to be ordinary Americans but not by themselves a majority. The Democratic Party, from its formation in 1832, has been a coalition of those regarded as out-peoples, often at odds with one another but together often a majority.
Both parties’ voters today are acting characteristically. The vast body of Republicans has no truck with the plaints of never-Trumpers. The Democrats are in turmoil, panicking at the possibility of having enemies on the left, to the point that House Democrats at first couldn’t pass a resolution decrying the blatant anti-Semitism of one of their own.
So we see multiple presidential candidates racing to embrace programs with 8 to 20-some percent support in the general electorate — racial reparations, ninth-month abortions, tearing down existing border walls, abolishing Immigration and Customs Enforcement.
We see eminences, hoarse from denouncing Donald Trump for violating longstanding norms, now advocating the abolishment of the Electoral College; packing the Supreme Court; enacting the 16-year-old vote and the Green New Deal, with its abolition of gas-powered automobiles and flatulent cattle.
Old rules of thumb, it seems, can yield to even older ones.
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Imported automobiles are parked in a lot at the port of Newark New Jersey, U.S., February 19, 2019. REUTERS/Eduardo Munoz
March 21, 2019
WASHINGTON (Reuters) – A conservative group has sued the U.S. government for access to a report on whether auto imports pose a big enough security risk to justify hefty tariffs on the sector, part of a growing chorus demanding a copy of the document.
Cause of Action Institute (CoA), a watchdog aligned with the conservative political activists David and Charles Koch, asked the District of Columbia Federal Court on Wednesday to require the Commerce department to hand over a copy of the report, which could unleash tariffs of up to 25 percent on imported cars and parts.
Last month, Commerce Secretary Wilbur Ross submitted the so-called “Section 232” national security report to President Donald Trump, starting a 90-day countdown for him to decide whether to impose the tariffs on millions of imports.
The Commerce department declined to comment.
The industry has warned that tariffs could add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the U.S. economy.
The Commerce Department started its investigation in May 2018 at Trump’s request. Known as a Section 232 investigation, its purpose was to determine the effects of imports on national security. It had to be completed by February.
In the suit, CoA alleged the Commerce Department has missed deadlines to respond to Freedom of Information Act Requests it filed for the report on Feb. 18, a day after the report was sent to the White House.
Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, has also sought a copy of the report without success, Politico reported.
Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner.
(Reporting by Alexandra Alper; Additional Reporting by David Shepardson and David Lawder; Editing by Dan Grebler)
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FILE PHOTO: Fiat Chrysler Automobiles logo is seen on a panel at the media center in Balocco, Italy, June 1, 2018. REUTERS/Massimo Pinca
March 19, 2019
LONDON (Reuters) – Fiat Chrysler shares jumped on Tuesday to the top of Europe’s STOXX 600 after the president of Peugeot family holding company FFP told French daily Les Echos he would support a new deal and suggested Fiat Chrysler was among the options.
“With them, as with others, the planets could be aligned,” Robert Peugeot was reported as saying, asked about targets for acquisitions or mergers.
Fiat Chrysler (FCA) declined to comment.
Shares in the Italian-American carmaker were up 5.2 percent by 1050 GMT, while Peugeot gained 2.7 percent, helping boost Europe’s autos index which was up 2.5 percent.
Peugeot’s remarks came on the heels of reports the group’s CEO Carlos Tavares is open to deals and that Fiat, General Motors, and Jaguar Land Rover could be ideal partners.
FCA’s new boss Mike Manley, who took over after deal-making guru Sergio Marchionne died last year, said this month the carmaker was open to pursuing alliances and merger opportunities if they make sense and strengthen its future.
FCA is often cited as a possible merger candidate because of its strong exposure to the North American market, where it generates the lion’s share of profits, and because of its popular Jeep, RAM and Maserati brands.
“PSA is essentially an EU pure play as things stand (roughly 90 percent of consolidated unit sales in EU) so an acquisition of a company with a broader reach would make strategic sense,” said Evercore ISI analyst Arndt Ellinghorst.
Investors and analysts alike were wary of betting on an imminent deal, though, mindful of potential antitrust obstacles.
“Although we believe that some M&A could materialize in the automotive sector, we do not expect it in the short term,” said Mediobanca Securities analyst Andrea Balloni.
(Reporting by Helen Reid, Danilo Masoni, Agnieszka Flak; Editing by Keith Weir)
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FILE PHOTO: A large robot nicknamed Kong lifts the body of a Ford Expedition SUV at Ford’s Kentucky Truck Plant as the No. 2 U.S. automaker ramps up production of two large SUV models in Louisville, Kentucky, U.S., February 9, 2018. REUTERS/Nick Carey/File Photo
March 19, 2019
By Joseph White
DETROIT (Reuters) – Ford Motor Co <F.N> said it will boost U.S. production of its largest sport utility vehicles in a move to grab profits in a market where consumers favor larger, more comfortable vehicles.
Ford’s Kentucky Truck plant in Louisville will increase the production rate for Ford Expedition and Lincoln Navigator sport utility vehicles by 20 percent in July – the second 20 percent increase in a year for both models, executives said during a media briefing on Monday.
The move highlights Detroit automakers’ aggressive efforts to capitalize on popular, profitable large vehicles in America’s heartland, even as policymakers in California, China and Europe push for smaller, electric vehicles to reduce carbon dioxide emissions linked to climate change.
The Trump administration, however, has proposed freezing U.S. fuel efficiency standards – a decision that would make it easier for automakers to sell large SUVs and pickup trucks. [nL1N20T0TB]
With gasoline relatively cheap, U.S. consumers are paying premium prices for large SUVs that seat eight people and can tow a four-ton trailer.
The average transaction price of a new Ford Expedition is $62,700, Ford U.S. marketing director Matt VanDyke said, up $11,700 from the previous year. Ford does not disclose profits by model line. Average prices for the luxury Navigator rose to $81,000 in February from $78,000 a year earlier, according to Lincoln data.
In January, Ford said transaction prices across its U.S. model lines averaged $38,400, above the $34,000 industry average.
General Motors Co <GM.N>, which dominates the North American large SUV segment, will launch a new generation of its large SUV Chevrolet Suburban and Tahoe, and GMC Yukon, models later this year. Fiat Chrysler Automobiles NV <FCHA.MI> last month said it will re-enter the large SUV segment with new models due out in late 2020. [nL1N20L156]
Ford workers and engineers redesigned portions of the Kentucky Truck assembly line to allow for the latest increase, Ford North American manufacturing chief John Savona said.
For the first time, he said, workers at certain stations will be positioned at two levels – some in pits and some on platforms – to install parts on upper and lower sections of a vehicle in unison.
The redesigned Expedition and Navigator assembly system requires 550 additional workers, and those jobs will be filled by workers currently at Ford’s Louisville assembly plant, which builds small Ford Escape and Lincoln MKC SUVs, Savona said.
Ford invested $925 million to build the new generation Expedition and Navigator SUVs at the Kentucky plant. The automaker is pushing for market share in a segment it largely surrendered to rival GM over the past decade.
Since launching its new big SUVs, Ford has improved its share of the U.S. large SUV segment by 5.6 percentage points, Ford’s VanDyke told reporters on Monday.
But GM still commands a 70 percent share of a market where vehicles sell for more than double the average price of a midsize sedan. Ford on Monday night launched a marketing campaign to win over customers. Their slogan: “Built to be a better big.”
(Reporting By Joe White; Editing by Nick Carey)
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FILE PHOTO: BMW cars are seen at the automobile terminal in the port of Dalian, Liaoning province, China January 9, 2019. Picture taken January 9, 2019. REUTERS/Stringer
March 16, 2019
SHANGHAI (Reuters) – BMW AG <BMWG.DE> and Mercedes-Benz said on Saturday they will lower their prices in China, after the government announced it will reduce the country’s value-added tax (VAT) starting on April 1.
The German automobile companies each published posts on Chinese social media announcing immediate price cuts for several models. The discounts come as China endures a shrinking market for automobiles as the economy slows.
BMW said it would reduce prices for both domestically produced and imported models, including the locally-made BMW 3 series and BMW 5 series, along with the BMW X5 and BMW 7 import models. The BMW 320Li M model will sell for a suggested retail price of 339,800 yuan ($50,620), a drop of 10,000 yuan from its original price.
The reductions mark the company’s “active response to the national VAT adjustment notice,” BMW said in a post on WeChat, China’s popular messaging app.
Daimler AG-owned <DAIGn.DE> Mercedes-Benz announced similar price cuts on a range of its cars, also effective immediately, in advance of the upcoming VAT drop. The cuts shown on its social media page range from 10,000 yuan to 40,000 yuan on select models.
On March 5, Chinese Premier Li Keqiang announced that China will cut VAT across a range of industries, with the tax set to drop in the manufacturing sector from 16 percent to 13 percent and in the transport sector from 10 percent to 9 percent.
The carmakers’ cuts come as China’s automobile industry faces a major slowdown. In 2018, China’s car market shrank 5.8 percent, marking its first contraction in over two decades.
Policymakers have introduced a range of policies to stimulate demand for cars. In January, China’s National Development and Reform Commission (NDRC) said it would loosen restrictions on the second-hand car market and provide subsidies to boost purchases in rural areas.
(Reporting by Josh Horwitz; editing by Richard Pullin)
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FILE PHOTO: Imported automobiles are parked in a lot at the port of Newark New Jersey, U.S., February 19, 2019. REUTERS/Eduardo Munoz
March 15, 2019
WASHINGTON (Reuters) – President Donald Trump’s trade battles cost the U.S. economy $7.8 billion in lost gross domestic product in 2018, a study by a team of economists at leading American universities published this week showed.
Authors of the paper said they analyzed the short-run impact of Trump’s actions and found that imports from targeted countries declined 31.5 percent while targeted U.S. exports fell by 11 percent. They also found that annual consumer and producer losses from higher costs of imports totaled $68.8 billion.
“After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8 billion,” or 0.04 percent of GDP, the researchers said.
The study was authored by a team of economists at the University of California Berkeley, Columbia University, Yale University and University of California at Los Angeles (UCLA) and published by the National Bureau of Economic research. https://www.nber.org/papers/w25638
Having dubbed himself the “tariff man,” Trump pledged on both the campaign trail and as president to reduce the trade deficit by shutting out unfairly traded imports and renegotiating free trade agreements.
Trump has pursued a protectionist trade agenda to shield U.S. manufacturing. Washington and Beijing have been locked in a tit-for-tat tariff battle for months as imposing unilateral tariffs to combat, and Trump has imposed tariffs that have roiled the European Union and other major trading partners.
The authors said while U.S. tariffs favored sectors located in “politically competitive” counties, the retaliatory tariffs imposed on U.S. goods have offset the benefits to these areas.
“We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war,” the researchers said.
(Reporting by Humeyra Pamuk)
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