U.S. Trade Negotiators May Sell Out Auto Industry For Rice

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1st Gear: You Down With TPP? Not Really

We've talked about how the Trans Pacific Partnership may benefit Japanese automakers as the agreement between the United States and Asian countries aims to improve trade, but it may be a loser for American automakers.


From the Nikkei Asian Review via David Shepardson:

Nikkei Asian Review reported the U.S. Trade Representative Michael Froman’s office will end efforts to convince Japan to drop standards on car imports in exchange for Japan’s agreement to import an additional 10,000 tons of U.S. rice. The report said talks will begin in Washington on Wednesday aimed at working out the details — and a deal means it is more likely a final deal on a 12-nation Trans-Pacific Partnership could be reached by spring.


Automakers have been pushing for at least three years to convince the Obama administration to include provisions in the agreement barring the countries from currency manipulation, but Treasury Secretary Jacob Lew and Froman have repeatedly shown no interest in doing so, arguing such issues are better addressed by global forums like the World Trade Organization.

That's right. Japan will send us trucks, maybe, and we'll send them rice. Seems like a fair trade.

Automakers argue that it's not hard to compete against a car company but it is hard to compete against a country (ahem Japan) that lowers its currency, thus making their imports to the U.S. cheaper and cuts down on costs. At the same time, U.S. automakers are limited to selling just 5,000 cars a year in Japan (UPDATE: A well-informed reader points out that the 5,000-car import rule is slightly more complex than limiting automakers to 5,000 cars a year, but rather to a single importer and single vehicle type. In practice, though, it's not easy to sell large quantities of American-made cars in Japan.)


2nd Gear: The Weird World Where Suzuki Is Killing It


Suzuki seems like an Indian car brand at this point, as they've continued to try to expand market share in the subcontinent via their subsidiary Maruti Suzuki India. While the Indian car market has been a little shaky lately, few countries benefit more from cheap oil than India and Suzuki is betting it's going to be a big year.

From Bloomberg:

Maruti, which today reported earnings for the quarter ended December, bucked the slump suffered by rivals in the two years through March 2014 as economic growth slowed to near a decade’s low. A gauge of consumer confidence is signaling a possible increase in purchases of durables in the world’s second-most populous nation as a plunge in energy costs helps policy makers stoke economic growth without fanning inflation.

Suzuki Motor Corp. (7269)’s unit said third-quarter net income climbed 18 percent from a year earlier to 8.02 billion rupees ($131 million), missing the 8.93 billion-rupee median estimate of 36 analysts’ estimates compiled by Bloomberg. Sales rose 15 percent to 122.6 billion rupees, according to a statement.


Don't bet against Suzuki here. They get India in a way that they never got America.

3rd Gear: VW And The Trouble With Goals


Under-promising and over-delivering is why everyone is on Subaru's jock. They didn't come out like VW CEO Martin Winterkorn (technically it was Stefan Jacoby first) and tell everyone they were going to sell way more cars than they ever had in the United States, they just did it. Hell, they can barely keep the cars in stock.

At the end of the year, Volkswagen sold 366,970 cars. Subaru sold 513,693. Remember, Volkswagen's goal was to sell 800,000 cars in the U.S. by the end of the decade.


The Auto News break down of everything is worth reading, just for the reminder that it was the conventional wisdom in 2012 that no one was hotter than Volkswagen.

Basically, Volkswagen had the right idea by trading on their reputation for German engineering while selling cheaper (both in price and quality) cars, but the wrong product. They expanded the dealership network as they grew but didn't invest in a cheap CUV /SUV product and everyone else caught up with them.


4th Gear: Toyota Wants Moving Away From Seniority To Merit In Japan


Toyota is reportedly moving away from the traditional way of paying workers based on how long they've been with the company towards performance-based incentives in a move to attract a younger talent pool.

Per Reuters:

Toyota's new arrangement, designed to attract young talent, will apply to about 40,000 employees, or about 60 percent of its workers, aged between 18 and 65, according to the Nikkei. (s.nikkei.com/1EMRveN)

The automaker has unveiled the proposal to its labor union and is hopeful of rolling it out next January, the Nikkei said.

Employees will be evaluated twice a year, with wages adjusted every six months, the Nikkei reported.



5th Gear: GM Recall Death Toll Rises To 50


It's hard to know exactly how many people would be alive today if GM didn't have a problem with faulty ignitions, but the Kenneth Feinberg-run victims compensation fund has so far has concluded that 50 death cases and 75 injury cases are eligible for funds.

According to the Freep, Feinberg has reported that they've received a total of 338 death claims and 2,730 injury claims.


Reverse: Shelby GT 350 Debuts

On this day in 1965, the Shelby GT 350, a version of a Ford Mustang sports car developed by the American auto racer and car designer Carroll Shelby, is launched. The Shelby GT 350, which featured a 306 horsepower V-8 engine, remained in production through the end of the 1960s and today is a valuable collector's item.



Neutral: You Down With TPP? Should American carmakers ask for something less ridiculous as restrictions on currency manipulation? Or are they standing up for all American industry?


Photo Credit: AP Images

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