Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories that your favorite auto exec is probably feverishly double-checking right this second.
1st Gear: We All Told You This Was A Bad Idea
It wasn’t that long ago when we were explaining that Trump’s escalating trade war with China was founded on bullshit and was going to go poorly and, well, look at us now.
China’s about to hit back at the U.S. with reciprocal tariffs on 106 products, including cars, including electric cars, including Tesla, as Bloomberg reports this morning:
Tesla Inc. needs to brace for another setback after China included electric cars among American products that it’s targeting with additional tariffs in its counter-punch to the U.S.
While other autos imported from the U.S. were also on the list, including most types of SUVs, Tesla is at a particular risk because it relies on American-made vehicles for all its Chinese sales. Other U.S. carmakers such as General Motors Co. and Ford Motor Co. manufacture in China.
“The jump in tax levy hurts Tesla the most as it had not yet started local production in China,” said Cui Dongshu, the secretary general of China’s Passenger Car Association. “For GM and Ford, they can always make up with China-produced ones.”
Official state media organ The People’s Daily added insult to injury when it listed the key targets of these reciprocal tariffs and put cars behind soybeans.
Talk about a diss. Won’t even give Tesla the honor of being the first most penalized good.
2nd Gear: GM And Ford Call For Deescalation
Even though they’re in better shape than Tesla, which still hasn’t secured a deal for production in China, GM and Ford are calling for everyone to just simmer down, simmer down, this wasn’t fun before and it’s even less fun now that people are punching each other. GM was the first to speak out, then Ford, and they had good reason to, as The Financial Times reports:
On Wednesday, Robert Lighthizer, the US trade representative, announced measures against Beijing including raised levies on imported Chinese cars from 2.5 per cent to 25 per cent, matching Chinese tariffs on imported cars.
But this appears likely to hit General Motors’ exports of China-made Buicks to the US and could dent Ford’s plans to export its Focus to the US starting next year, while leaving most Chinese-owned carmakers unscathed. Almost no Chinese-owned vehicle makers export to the US, the exceptions being the Volvo, the Swedish brand owned by China’s Geely and BYD of Shenzhen.
I’d quote GM and Ford’s statements but they’re both extremely bland, that they “believe” in both countries and “encourage” them to work together.
The FT argues that none of this is hitting any one carmaker that hard right now, but it’s going to make it difficult for American automakers to build cars in China and send them over here (as Ford planned to do with the Focus) and for Chinese carmakers to sell cars here (as Geely and GAC planned, among others.)
3rd Gear: Meanwhile, Car Sales In The U.S. Are Up
Oh uh, right. Yes. Us Americans bought a bunch of cars this Spring, per the AFP:
The seasonally adjusted annual selling rate jumped to 17.48 million units compared to 16.82 million units a year ago, according to the research firm Autodata.
Analysts credited the good news to automakers’ increased reliance on fleet sales, Americans’ appetite for SUVs and light trucks, and recent tax cuts that gave individuals and corporations more spending money.
“March proved to be a lion for the domestic automakers, with double and even triple-digit sales increases posted for redesigned SUVs,” Rebecca Lindland, executive analyst at Kelley Blue Book, said in prepared remarks.
Among the big names, GM was up an “unusually high” 16 percent, Fiat Chrysler up 14 percent, Ford, Honda and Toyota were up only around three percent give or take half a percentage point and Nissan dropped some 3.7 percent even though the Rogue somehow outsold the RAV4.
4th Gear: Also Way The Hell Up Is Volvo
Volvo is up about 50 percent compared to last year, riding this auto sales wave real hard, as the company announced in a press release:
Volvo Car USA, LLC, (VCUSA) reported U.S. sales of 8,233 vehicles for the month of March, an increase of 53.7 percent from the same period last year. For the first quarter of 2018, VCUSA sales were 20,083, an increase of 49.03 percent from the previous year.
The new XC40 launched in March and 1,001 have been sold during its first month of availability.
After everything I’ve followed in the auto industry, I really shouldn’t be surprised that a company debuting a bunch of attractive crossovers would do well in this environment. But hey! Volvo. it’s come a long way since its days of selling old box wagons that weren’t as cool as the 240.
5th Gear: The Big 3 Get $182 Million From Takata
A U.S. District Court said yesterday who is getting what from the restitution fund set up by Takata, with $121.5 million going to Honda and $182.5 going to the big three. Here’s the split, as The Detroit News reports:
The United States District Court in the Eastern District Of Michigan said Tuesday that General Motors Co. will receive $86.8 million, Fiat Chrysler Automobiles NV will get $51.8 million and Ford Motor Co. will receive $43.7 million.
The figures are down slightly from a recommendation from those from a special master established to oversee the fund. Recommendations had called for GM to receive $90 million, while Fiat Chrysler would have gotten $53.8 million and Ford would have received $45.3 million.
The Japanese air-bag manufacturer, which was sold to Chinese-owned Key Safety Systems that is headquartered in Sterling Heights, will be required to pay $121.5 million to Honda Motor Co., which had the most Takata air bags recalled of any automaker.
This is all thanks to Takata’s guilty plea in one of the worst car safety crises in history.
Reverse: And When Are We Going Back To Actual Stock Cars?
Neutral: If You’re Tesla, What’s Your Move?
If you were the one running the show in the Bay, what would be your first move? Are you trying to play it cool, or are you picking up the gold phone with a line to the White House?