Honda plans to close its only car plant in the UK, the European Union says it’ll fight back in a trade war with the U.S., Carlos Ghosn gets ready for trial, General Motors puts its money where its SUVs are, and McLaren stands by its anti-SUV mindset. All of this and more in The Morning Shift for Tuesday, Feb. 19, 2019.
1st Gear: Honda Plans to Exit Production in the U.K.
We’re now about a month away from the U.K. leaving the European Union, and Honda just so happened to confirm a 2021 expiration date on its only British car plant in Swindon—along with the loss of up to 3,500 jobs, according to Reuters. But Reuters reports that Honda said the decision is definitely, totally not related to Brexit, despite its convenient timing.
Instead, Honda said the closure is more about the fact that the company hasn’t been doing as well in Europe and wants to focus on producing vehicles where it’s selling the most of them. Here’s more, from Reuters:
But the timing of the announcement, just 38 days before Brexit, comes amid deepening Japanese corporate worries about investing in Britain after it leaves the EU.
“This decision was not informed by Brexit,” said Honda Chief Executive Takahiro Hachigo.
“We had to consider the rise of electrified vehicles, and the different speeds at which electric vehicles will be taken up in North America and Europe.”
Honda, which builds its Civic car in Britain and Turkey, said it would stop making the model in both countries. The announcement comes just over two weeks after fellow Japanese carmaker Nissan reversed its decision to build a new SUV in Britain.
The Swindon plant makes up a huge portion of car production in Britain, with Reuters reporting that it’s responsible for 10 percent of cars built in the country. In 2018, the story said Swindon built 160,000 vehicles.
That makes the closure “a devastating decision for Swindon and the UK,” the story quoted UK business minister Greg Clark as saying, and Reuters reports that the country’s largest trade union, Unite, said it would fight to keep the production plant open.
2nd Gear: European Union Says It’ll Retaliate If the U.S. Puts Tariffs on Imported Vehicles
In more cheery developments worldwide, the European Union said it won’t just sit back and take it if the U.S. puts tariffs on imported vehicles. And remember: We, the consumers, ultimately pay the cost for taxes, tariffs and trade wars.
Reuters reports that a confidential report from the U.S. Commerce Department sent to President Donald Trump recently could make way for him to put tariffs of up to 25 percent on imported cars and parts by designating them a national security threat. Because the report isn’t public, Reuters reports that exporters like Germany, Japan and South Korea don’t know what’s coming.
But while the story said Trump promised European Commission President Jean-Claude Juncker he wouldn’t impose tariffs for the time being and Juncker said he believes it, the EU seems ready to retaliate if it doesn’t go as planned.
“Trump gave me his word that there won’t be any car tariffs for the time being. I view this commitment as something you can rely on,” Juncker told the German daily Stuttgarter Zeitung in an interview. He did not specify when Trump made the promise.
Juncker added if Trump imposed tariffs on European cars nonetheless, the EU would react immediately and not feel obliged to stick to its promise to buy more soybeans and liquefied gas from the United States.
The car dispute follows American tariffs on European steel and aluminum imports, brought using the same national-security justification. The bloc retaliated imposing duties on 2.8 billion euros of U.S. imports, ranging from Harley-Davidson Inc. motorcycles to Levi Strauss & Co. jeans.
U.S. tariffs on European cars would mark a significant escalation of trans-Atlantic tensions because the value of EU automotive exports to the American market is about 10 times greater than the bloc’s steel and aluminum exports. As a result, European retaliatory duties would target a larger amount of U.S. exports to Europe.
A 25 percent U.S. levy on foreign cars would add 10,000 euros to the sticker price of European vehicles imported into the country, according to the Commission. That would especially affect German brands such as Volkswagen, Porsche and Mercedes-Benz.
Bloomberg reports that a 25-percent tariff would add 10,000 euros, or $11,300 at current exchange rates, to the sticker of imported European vehicles, according to the the European Commission.
3rd Gear: Ghosn Gets Ready for Trial
Carlos Ghosn is still locked up over his company’s allegations of financial misconduct from November, having been denied bail under his former legal team. With a trial coming up this year and the potential to get up to 10 years in prison, Bloomberg reports, he’s overhauling his legal team and getting ready for a fight.
Ghosn, who formerly headed Renault and was a chairman at both Nissan and Mitsubishi, went to jail after allegations of financial misconduct from Nissan. The issue caused a lot of strain on the Renault-Nissan-Mitsubishi alliance, but Renault, which kept Ghosn on as CEO long after Nissan and Mitsubishi dropped him, even alleged recently that it found evidence of financial misconduct.
For Ghosn, though, it’s time for the legal battle. Bloomberg reports that with a legal system in Japan that has a 99-percent conviction rate facing him down, Ghosn completely reworked his legal team last week—including adding a lead lawyer nicknamed “The Razor.”
He replaced a group led by former local prosecutor Motonari Otsuru with one overseen by Junichiro Hironaka, who is known for aggressive tactics defending high-profile clients such as a former senior bureaucrat accused of corruption. Hironaka will hold his first press conference as Ghosn’s lawyer on Wednesday.
“Otsuru was miscast because he’s not the type of lawyer that will take a combative stance against the prosecutors and likely couldn’t maintain a relationship of trust with Ghosn,” said Nobuo Gohara, a lawyer and former prosecutor in Japan. “Hironaka is the type of lawyer who will thoroughly fight the prosecutors’ charge.”
Ghosn’s defense team includes Takashi Takano, who represented a member of the Aum Shinrikyo cult behind the 1995 sarin gas attack in Tokyo.
A Tokyo-based defense lawyer quoted by Bloomberg, Nobuko Otsuki, called Takano and Hironaka “all-stars.”
4th Gear: GM Invests $36 Million Into Future SUV Production in Michigan
Most of the General Motors production news lately has been about how many plants it’s closing and jobs it’s cutting down, but the Detroit Free Press reports that the company is putting $36 million into its Lansing Delta Township plant in Michigan for its future crossover and SUV production.
The Lansing Delta Township plant builds both the Chevrolet Traverse and Buick Enclave SUVs, and the Freep reports that opened in 2006, it’s GM’s newest plant and has about 2,600 employees. The plant has also been the recipient of plenty of GM investments over the years, according to the Freep:
The investment comes as GM is idling five of its other factories in North America this year, affecting 6,200 jobs, as part of a restructuring plan that included eliminating a total of 8,000 white-collar jobs, through buyouts, contractor cuts and involuntary layoffs.
The UAW lauded the investment.
“The membership of UAW Local 602 are under the outstanding leadership of UAW Region 1D Director Gerald Kariem and they applaud this investment on behalf of the entire workforce and the community,” said UAW Vice President Terry Dittes in a statement. “Delta Township builds the world class Chevy Traverse and Buick Enclave. We in the UAW look forward to more investments like this from General Motors so they can build where they sell.”
Since 2009, GM has invested more than $600 million into the plant. In 2015, GM said it would invest $5.4 billion in U.S. plant improvements during the next three years.
GM CEO Mary Barra called the Traverse and Enclave important products in the company’s “growing crossover portfolio,” and said the investment will help “prepare the plant for future crossover production.”
5th Gear: McLaren Will Resist
You know how in the Terminator movies, the faction of the human population still fighting the inevitable robot takeover is aptly named the “Resistance”? Well, McLaren is the Resistance in the automotive industry—still fighting the inevitable takeover of the crossovers and SUVs.
While Lamborghini, Aston Martin and Ferrari have all given into the onslaught of SUVs and their mass appeal, and while Bugatti debates its place in this world, McLaren has yet to crack. It said it wouldn’t make an SUV at the beginning of last year, in September of last year, and, once again, this month.
From Automotive News:
Despite the market pressures being put on premium automakers to offer SUVs, the McLaren brand will remain a holdout.
“I can easily answer that and say no,” said Mark Roberts, head of design operations for McLaren Automotive. “We really do deliver on the ultimate driving experience. For us, it means no compromise. An SUV doesn’t allow us to deliver on that. It’s not a no-compromise kind of vehicle.”
McLaren is the Resistance. For how long—well, that remains to be seen.
Reverse: Past Daytona 500 Winners
It’s the middle of February, meaning there were a handful of different Daytona 500 winners on any given day this time of year. On Feb. 19 in 1978, 1984, 1989,
1995 and 2006, NASCAR’s biggest race went to Bobby Allison, Cale Yarborough, Darrell Waltrip, Sterling Marlin and Jimmie Johnson.
Neutral: Do You Think McLaren Will Give In?
If so, how long will it be?