We're Not Out of the Woods on Auto Tariffs

Auto imports in 1959
Auto imports in 1959
Photo: Getty Images

It’s only a day after Christmas and already I have three news items on potentially criminal activity to report. All that and more on The Morning Shift for Wednesday, December 26th, 2018. The auto industry has to get its act together.


1st Gear: Commerce Sec: You Thought the Whole Tariffs Thing Was Over?

Oh, you think you’re done with the whole auto tariffs thing after Trump and China slowly backed away from each other the other week? NOT SO FAST. Commerce Secretary Wilbur Ross gave an interview with the Financial Times saying that, basically, his ultimate report on whether or not this is all somehow an issue of national security isn’t due until February 17, and even then Trump has “a lot of flexibility” to act upon it.

Here’s the main stuff from the FT:

In a telephone interview with the Financial Times, Mr Ross said the report was still a “work in progress” but the US was intent on correcting a trade imbalance in cars that was a relic of the postwar years.

“After world war two it was a deliberate US policy to help rebuild Europe and Asia with direct aid like the Marshall Plan and trade concessions, but the mistake we made was not time-limiting them,” Mr Ross said. “We are stuck now with concessions that were totally appropriate in 1950.”

The president had “a lot of flexibility” and “complete discretion” in making a final decision in response to the report, he said.

I’m inclined to see this as non-news, and that Ross isn’t saying anything particularly new. But also it’s a bit of a declaration of intent to act, and that does not look great. Our history of auto tariffs isn’t a particularly healthy one. You read my thing on how the Reagan-era import restrictions helped beat down the American auto industry, right?

2nd Gear: Nissan America Exec Out on Bail In Japan

Carlos Ghosn isn’t the only one caught up in the somewhat mysterious arrests at the top of Nissan. His close aide Greg Kelly had been in a detention facility for 37 days before posting a $630,000 bail, as the Japan Times reports:

Greg Kelly, a close aide to Nissan Motor Co.’s ousted chairman Carlos Ghosn, denied the allegations against him in a statement issued by his lawyer following his release on bail Tuesday night from a Tokyo prison, where he had been held for over a month.

“I expect that the trial will start soon. … I believe my innocence will be revealed in the trial,” he said in the statement in response to the indictment accusing him of conspiring to understate Ghosn’s remuneration for years in securities reports.


After leaving the facility, Kelly was admitted to a hospital in Ibaraki Prefecture. He suffers from spinal stenosis and is expected to stay in the hospital until the end of the year, according to sources close to him.


Ghosn, meanwhile, remains in detention.

3rd Gear: BMW Faces Criminal Probe For South Korean Engine Fires

The company has already been fined $10 million, as Bloomberg reports:

BMW AG is facing a criminal probe in South Korea after investigators concluded the manufacturer concealed fire hazards and delayed recalls for a problem that has dented sales and its reputation in the Asian country.

South Korea’s transport ministry plans to ask prosecutors to investigate the German carmaker, the ministry said in a statement on Monday. Korea also fined BMW 11.2 billion won ($10 million) for belatedly recalling 22,670 vehicles. The team that’s been investigating BMW since August found defects that could cause coolant to leak and set the engine on fire.


I remember when this story first broke and I wondered if it was really a story at all. The number of cases of fires was close to 40, which sounded high but not astronomical all things considered. But it is a good reminder that the raw facts and statistics of the matter hardly account for all of public sentiment, and that’s how regulating the car industry works.

4th Gear: Tata Missed IPO Window For Jaguar Land Rover And Now...

The big news about Jaguar Land Rover this year so far (other than Brexit complications) is that its parent Tata Motors seemed like it was going to IPO it, but missed its window as we’re about to hit a major recession. IPOs generally have a short window, and your two options are basically sell it or keep on truckin’. Now it looks like Tata is going with the truckin’ option, as noted in a paywalled story from the Times of London, also reported on here in Autocar:

Natarajan Chandrasekaran, chairman of Indian firm Tata Motors and Jaguar Land Rover, has issued a statement in response to speculative stories about the future of the car maker, saying: “I would like to clarify that we remain committed to the long-term growth and success of JLR.”

He added: “JLR will continue to face global headwinds being experienced by the auto industry and, to address them, the management is taking the right steps to drive operational excellence, whilst continuing to invest in innovative products and technology to stay competitive globally. There is no truth to the rumours that Tata Motors is looking to divest our stake in JLR or discontinue the Jaguar brand.”


Nothing quashes any rumors that you were considering getting rid of something like telling the press how adamantly you remain committed to long-term growth.

5th Gear: VW Reports New “Irregularity” in Diesel Emissions Software, Somehow

I was under the impression that there was nothing left for VW to cheat about and that Dieselgate had already caught up 100 percent of VW’s emissions controls software. I was wrong! There is always more shit, somehow.


This stuff isn’t illegal (yet?), but it is funky. Volkswagen’s EA 189 engine, a 1.2-liter diesel, apparently has some irregularities, as German paper Bild am Sonntag first reported. What’s interesting is that VW found the issue through an internal check, and then reported it to the authorities, as Die Zeit reports:

In an internal control of the new exhaust gas software for VW diesel vehicles “abnormalities” have been registered. This was announced by a company spokesman. They informed the Kraftfahrt-Bundesamt (KBA) with “immediate action.”


According to the newspaper, the conspicuousness in the software is “a possibly illegal function”. Experts in the Kraftfahrt-Bundesamt (KBA) therefore assumed that the function was an inadmissible shutdown device. The Ministry of Transport said the problem with the software update is known. The process will be audited by the KBA.


Reverse: RIP Tucker


Neutral: You’re an Auto Exec Facing the Prospect of Tariffs. What’s Your Play?

Let’s armchair auto exec for a minute here. Let’s say you run a medium-size car company with business here in the Unites States. Are you freaked out by the prospect of auto tariffs coming out of Trump? What is your business plan for it?

Raphael Orlove is features editor for Jalopnik.



1st gear:

Seems to me that Trump is doing a fine job of custom-engineering us into a recession. And you know what? I’m actually sort of ok with that idea. Why? Because if there’s one thing only out there that will get his lemming followers to finally snap out of their haze it’ll be a good ole’ fashion recession. Seeing as how most trump supporters have limited educations and thus work at low skill level jobs they’ll likely be the first to feel the effects. Just in time for the 2020 elections.