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 you need to know.
1st Gear: Meet The New Boss
President Donald Trump is putting his economic agenda front and center as he gets down to business. On Monday he met with executives including Tesla and SpaceX’s Elon Musk and Ford’s Mark Fields to discuss boosting U.S. manufacturing, including Trump’s plan to cut regulations by 75 percent. Which is a lot, but no specifics have been offered by the White House as of yet. Trump has also said he wants to cut corporate taxes to the 15-20 percent, down from current levels of 35 percent.
Today—and by that I mean right now, as I write this—Trump is meeting with Fields again as well as the CEOs of General Motors and Fiat Chrysler on the same subject. Via Reuters:
“I want new plants to be built here for cars sold here!” Trump said in a tweet ahead of the breakfast meeting with automakers, saying he would discuss U.S. jobs with the chief executives.
Trump has criticized automakers for building cars in Mexico and elsewhere and has threatened to impose 35 percent tariffs on imported vehicles.
The meeting is the latest sign of Trump’s uncommon degree of intervention for a U.S. president into corporate affairs as he has repeatedly jawboned automakers and other manufacturers to “buy American and hire American.”
I eagerly look forward to announcements of the new domestic truck production plans from automakers that were already in the works that Trump can take credit for on Twitter.
Here’s what we know of the meeting so far:
2nd Gear: A Freeze On EPA Grants And Contracts
It’s not clear what immediate effect this will have on the auto industry, but here’s one example of how Trump is cracking down on that “out of control” environmentalism right out of the gate: the new administration has already put a halt to grants and new contracts doled out by the Environmental Protection Agency. Oh, and they told employees not to say anything about it.
From The Verge:
In an email obtained by ProPublica, one EPA contractor writes that: “The new EPA administration has asked that all contract and grant awards be temporarily suspended, effective immediately. Until we receive further clarification, this includes task orders and work assignments.”
For now, other details are still unclear. We don’t know whether the freeze affects all existing contracts — worth about $6.4 billion — or just new grants and contracts. The move is likely to be widely felt, though; in 2013, the EPA awarded $9.6 billion in grants and about $1.4 billion in contracts. Last year, the total budget was $8.6 billion, with the money for grants and contracts given to organizations at every level, from local nonprofits to state governments.
Myron Ebell, who led Trump’s EPA transition, confirmed the freeze. He said was just so the new administration could “make sure to look” at regulations and grants first, but such a move is unusual.
I’d say those aggressive EPA fuel economy targets will soon be on the chopping block, one way or another.
3rd Gear: What Is An American Car?
Given the diversity of where parts come from and where cars are built, it’s tougher than ever to identify an “American” car versus a “foreign” one. How does an Ohio-built Honda Accord stack up against a Mexican-built Ford Focus? But as the new administration aims to renegotiate NAFTA, it may need to examine what all of that means. Via Reuters:
Auto industry officials expect Trump to urge Canada and Mexico to agree to new tougher “rules of origin” that would require a higher percentage of North American content to be considered tariff free. Under NAFTA, at least 62.5 percent of a passenger car or light truck’s net cost must originate in North America - defined as the United States, Canada or Mexico - to avoid tariffs.
Separately, the U.S. government since 1994 tracked the percentage of a vehicle’s content that is made in the United States and Canada, and required automakers to disclose those percentages on labels put on vehicles sold in the United States.
The Chevrolet Traverse and the Honda Accord made in Ohio had 80 percent U.S. and Canadian content in 2016, for example. The Ram pickup had 59 percent U.S. and Canadian content, according to government data compiled in the 2016 American Automobile Labeling Act report.
4th Gear: It’s Still A Good Time To Buy A New Car
Incentives and financing on new cars are still strong at the moment, so if you missed the big end of year sales at the close of 2016, now remains a good time to buy. Via The Detroit Free Press:
Prices may be at record levels, but — luckily for consumers — deals are, too. Automakers were offering around $4,000 per vehicle in incentives at the end of 2016, and that could inch up even further this year, says Jesse Toprak, CEO of the car-shopping site CarHub.com. Deals are coming in the form of bonus cash — like a current $1,000 offer from Chevrolet — and low-interest financing, such as Subaru’s zero-percent financing offer on the Outback and Forester SUVs. Look for some of the highest incentives on slow-selling small and midsize cars, like the Toyota Camry and Chevrolet Sonic, as well as hybrids like the Ford C-Max. Incentives will likely pick up in March and April, when more buyers tend to head to dealerships.
Analysts say automakers are trying to be smarter with incentives, having been burned in the past. Deals are targeted at specific vehicles, regions and even individual dealerships. Incentives could also taper off a bit if automakers cut car production to match the lower demand.
5th Gear: Omnicraft
Basically, Ford is gonna start making parts for cars that are not Fords. The new division, Omnicraft, will make parts for other makes as well as their own. Via The Detroit News:
Ford Motor Co. said Tuesday it is launching a new Omnicraft parts brand that will allow its dealers to provide parts and service to vehicles made by other automakers.
The first new Ford Customer Service Division brand in 50 years, Omnicraft aims to help Ford and Lincoln dealers grow sales, Ford says. The Dearborn automaker said it will give owners of other makes to buy competitively priced and quality parts and have their vehicles serviced at Ford dealerships.
Other automakers also offer their own brands of parts to sell for vehicles that are not their own, such as General Motors Co.’s ACDelco brand.
Ford initially is offering about 1,500 Omnicraft parts such as oil filters, brake pads and rotors, struts, starters and alternators. That figure will grow to 10,000 globally within three years, said Frederiek Toney, president of Global Ford Customer Service Division.
Reverse: Happy Birthday
Neutral: Are Environmental Regulations ‘Out Of Control’?
Or are you in favor of the EPA’s aggressive Obama-era fuel economy and emissions targets?