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Archive for the ‘Trade’ Category

Volvo’s Care Subscription Program Key to Growth Plans

VCNA chief acknowledges reliability concerns but says problems, warranty costs, are tumbling.

by Paul A. Eisenstein on Nov.08, 2018

Volvo Cars North America CEO Anders Gustafsson with images of some of the first workers at the automaker's new Charleston plant.

U.S. new vehicle sales are on course to post their second consecutive decline as 2018 draws to a close, but you’d have a hard time telling that if you were just looking at Volvo’s numbers.

The Swedish automaker has posted a 27% jump in demand through the end of October and, with more products ready to land in U.S. showrooms, Volvo Cars USA CEO Anders Gustafsson said Thursday he is optimistic the company can keep its momentum growing.

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Several factors could give meaning to his forecast, including not just the launch of the new Volvo S60, but the start of production at the Chinese-owned automaker’s first U.S. assembly plant in Charleston, South Carolina. Then there’s Care by Volvo, the subscription program the carmaker launched late last year.

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Toyota Earnings Soar on Global Sales Surge

Automaker lifts full-year forecast.

by Paul A. Eisenstein on Nov.06, 2018

Strong demand for Lexus, especially in the Chinese market, helped Toyota deliver strong earnings.

Toyota Motor Corp. reported a 28% increase in its net profit for the July-September quarter, earnings buoyed by strong demand in key global markets, including the Americas, Asia and Europe.

The Japanese giant also advised that it expects to see earnings push past earlier forecasts for the full year, in part driven by unexpectedly strong demand in China. Sales of the Lexus brand, have been booming there, despite a slowdown in the overall Chinese market.

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Sales gains were only one of the factors that propped up Toyota’s bottom line, said Senior Managing Masayoshi Shirayanagi. Referring to aggressive cost-cutting efforts, he said, “We are steadily making progress toward achieving our challenge-level target.”

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Tesla Expects to Spend as Much as $6B in Next Two Years

Money to be used for product development, China plant.

by Michael Strong on Nov.02, 2018

Tesla's move to build a new plan in China will include up to $3 billion to for a new plant and other expenditures.

Already plagued by rumors of needing to raise additional money, Tesla officials expect to spend between $5 billion and $6 billion in the next two years to expand production.

The company, which revealed the plan in its quarter filing with the Securities and Exchange Commission, is making big moves with the money.

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Tesla will spend between $2.5 billion and $3 billion in capital expenditures readying the business for increased Model 3 production, development on its next vehicle, the Model Y, the second-generation Roadster and other projects, according to the filing. (more…)

GM Handily Beats Earnings Forecast, Buoyed by Truck Sales

Shares soar in pre-bell trading.

by Paul A. Eisenstein on Oct.31, 2018

GM's Renaissance Center headquarters in Detroit.

General Motors delivered a positive surprise to analysts and investors on Wednesday morning, delivering significantly stronger earnings than had been forecast, buoyed by surging demand for its light truck line-up, including the completely redesigned Chevrolet Silverado pickup.

The announcement stands in sharp contrast to rival Ford Motor Co. which, last week, reported a significant decline in third-quarter income, despite strong demand for models like its F-150.

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GM said it earned a net of $2.53 billion during the July-to-September quarter, or $1.75 a share. A year ago, it lost $2.98 billion, or $2.03 a share, though that figure largely reflected the cost of completing the sale of its European-based Opel subsidiary to France’s PSA Group.

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With Saudi Crisis, Threat to Automakers Escalates

Middle East instability impacts U.S. economy.

by Joseph Szczesny on Oct.24, 2018

Joe Hinrichs, Ford president, said that the volatility of the Middle East, specifically Saudi Arabia, impacts automakers.

Car makers from around the world will pause briefly during the next couple of weeks to unveil their financial statements for the July-September quarter, which, on balance, was relatively calm despite rising pressure on their margins from Chinese and American tariffs.

However, VW CEO Herbert Diess did warn the stress on manufacturers is growing steadily. German carmakers only have a 50% chance of surviving reforms required to shift production to electric cars and to tackle new geopolitical threats push some carmakers out of business, he said.

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Meanwhile, the pressure from tariffs is liable to get more intense in the future. The Trump administration is continuing to threaten tariff on auto exported from Japan. Meanwhile, the unsettling news cycle from the Middle East that began with the kidnapping and murder of Jamal Khashoggi continues to unfold with uncertain consequences. (more…)

US-China Trade War May Cost BMW $600M Next Year

Automaker's SUV exports cut off due to tariffs.

by Joseph Szczesny on Oct.15, 2018

An early version of the 2019 X5 rolls down the BMW assembly line in Spartanburg, SC. The plant isn't shipping utes to China and that could cost the company big.

BMW expects its earnings to drop by almost $600 million next year if the trade war between the U.S. and China remains frozen in place, the German automaker’s CFO Nicolas Peter said during an interview with Automobilwoche, one of Germany’s leading automotive magazines.

Tariffs between the United States and China have cut exports of sport-utility vehicles from its U.S. plant in Spartanburg, South Carolina, to China, resulting in a hit to earnings of just below 300 million euros, Peter said, according to an extract of an article.

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“If the tariffs remain in 2019, it could have a full-year impact of half a billion euros,” Peter added.  (more…)

Bill Ford Leads Exodus from Saudi Economic Event in Response to Alleged Murder of Journalist

Global business, political and media leaders demand answers in disappearance.

by Paul A. Eisenstein on Oct.15, 2018

Ford Chairman Bill Ford is shown during a celebration of the 100th anniversary of the carmaker's River Rouge manufacturing complex.

Bill Ford, the chairman of Ford Motor Co., is leading an exodus of high-profile business leaders who have decided to pull out for an upcoming investor conference sponsored by Saudi Arabia.

The move comes amidst growing concerns about the fate of Saudi journalist Jamal Khashoggi, who reportedly entered the Saudi consultate in Istanbul, Turkey last week but failed to leave it, raising concerns he may have been murdered by hit men dispatched by Saudi leaders.

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Khashoggi was a regular contributor to a number of publications, including the Washington Post, and had been granted U.S residency. Reports have surfaced over the last several days indicating American intelligence officials may have had advance warning that Khashoggi faced threats from the Saudis. Turkish officials, meanwhile, claim to have evidence the journalist was murdered in the embassy, his remains subsequently being smuggled out.

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China Car Market Tumbles, Complicating Problems for U.S. Automakers

BMW plans to be first foreign maker to take control of Chinese joint venture.

by Paul A. Eisenstein on Oct.12, 2018

President Donald Trump is engaged in a trade war with China, and automakers are beginning to pay the price.

After nearly two decades of double-digit growth, the Chinese car market is entering a tailspin, and that could be particularly problematic for American automakers caught up in the U.S.-China trade war.

But other foreign automakers could better weather the downturn, in part due to changing rules that have lowered import tariffs – except on American products – and will now allow foreign manufacturers to take control of joint ventures. BMW is set to become the first to take advantage of the relaxed rules, agreeing to spend $4.2 billion to up its stake in an ongoing alliance with Brilliance China Automotive Holdings.

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“The automotive industry has been a driver of China’s economic growth for years. Now it is pulling back,” Xu Haidong, the assistant secretary general of the China Association of Automobile Manufacturers, said during a Friday news briefing, responding to questions about the market’s third straight monthly decline. (more…)

Volvo Scrambles as Trump Tariffs Shatter Export Plans for New U.S. Plant

China market closed, “I need to find a substitute," says US CEO.

by Paul A. Eisenstein on Oct.10, 2018

Volvo's new plant near Charleston, S.C., is churning out new S60s. It will add the XC90 in 2021.

Volvo’s plans for its first-ever American assembly plant have been thrown into turmoil as a result of Pres. Donald Trump’s trade war with China, something that will result in fewer auto exports from the South Carolina factory, potentially impacting hiring plans, the automaker’s U.S. CEO told TheDetroitBureau.com.

Volvo initially planned to use the Charleston facility as its global source for the all-new S60 sedan, while also producing some of its popular XC90 crossovers. Fully half of the assembly plant’s production was earmarked for China and other overseas markets, noted Anders Gustafson. But the administration’s escalating trade war has resulted in China boosting tariffs on American-made vehicles and parts from 25% to 40%, even as it reduces duties on auto imports from other trade partners to 15%.

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“Now, we cannot export to China” because the S60 would be priced out of the market, Gustafson, the president and CEO of Volvo Car USA, said during an interview near Los Angeles, where the company was offering journalists a first drive of the S60. “In this segment, you can’t raise prices because of competitiveness.” (more…)

Unions Withhold Support for New NAFTA Touted by Trump

Leaders want to see how some provisions will be enforced.

by Joseph Szczesny on Oct.03, 2018

UAW President Gary Jones wants to see how certain provisions of the new NAFTA are enforced before offering full-throated support of the deal.

One constituency, organized labor, is withholding its support to the revision to the North American Free Trade Agreement unveiled this week by President Donald Trump.

“For a quarter century NAFTA has been disastrous for working people in the U.S., Canada and Mexico and a gift to corporations offshoring good U.S. jobs,” the UAW, which supported Trump’s push to revamp NAFTA, said in a statement.

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“The true test of a new NAFTA agreement will be in whether it protects and enhances opportunities for the U.S. workforce and leads to higher wages and benefits for UAW members and manufacturing workers who have suffered for far too long,” Gary Jones, the UAW’s new president noted.  (more…)