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Japan’s trade concerns

Mazda Hofu Plant, Nishinoura District, Japan

Japanese car manufacturers that rely heavily on exports to sell their models in the US would be hardest hit by trade restrictions the country is threatening to impose.

Analysts have said that Mazda is most exposed to any trade restrictions in the world’s biggest car market after China, and their knock-on effects.

Mazda’s operating profit could be cut by 8.5 per cent in the year to March 2019 as it faces risks from a stronger yen if the trade uncertainties weaken the U.S. dollar, while any trade restrictions would raise the cost of imported cars from Japan, they said. 

Japan’s “Big 3” carmakers – Toyota, Nissan and Honda – face risks if an updated North American Free Trade Agreement (NAFTA) raises tariffs on vehicles and parts made in Mexico, where all three operate plants, and Canada, where Toyota and Honda build vehicles.

But their relatively higher U.S. production levels than their smaller rivals and more diverse regional manufacturing and sales footprint could help to cushion any impact.

Nissan and Honda, among the Japanese automakers with the most production in North America, could see profit rises of 9 per cent and nearly 6 per cent, respectively, they forecast.

Japanese automakers are already struggling with sluggish sales in North America due to falling demand for sedans, a mainstay of their offering and deeper discounts to shore up sales are hitting margins.

“(W)e see risks to the sustainability of export operations at Mazda Motor and Mitsubishi Motors, which are highly exposed to exports and have no production bases in the U.S. at present,” Nomura analyst Masataka Kunugimoto said in a research note earlier this month to Reuters.

While analysts expect Mazda to post a median fall in operating profit of 8.5 per cent in the financial year underway, some forecasts are for a much steeper decline. A fall would reverse a 20 per cent rise forecast for the year ended March 2018 as a weaker yen boosted its earnings.

Mazda sold roughly 1.6 million vehicles globally in the year to March 2017, nearly 20 per cent of them – all imported – in the United States.

Both Mazda and bigger rival Toyota see roughly 30 per cent of their global sales from the United States, Canada and Mexico, but around 70 per cent of the nearly 3 million cars Toyota currently sells in North America are produced locally in North America.

Mazda, which operates a factory in Mexico, announced earlier this year that it and Toyota would jointly build a manufacturing plant in Alabama, although vehicle production will not begin until 2021.


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BMW reveals subscription service

Ian Smith, CEO of BMW Group Financial Services USA and Region Americas

BMW’s new subscription pilot in the US will put drivers into the brand’s top performance cars for as much as $3,700 a month as the German automaker tests a new ownership model with its most exclusive customers. 

Access by BMW members will have the ability to request a vehicle based on their planned usage or activity via mobile app. Once a vehicle has been requested, a BMW concierge will personally deliver the vehicle most closely matching the member’s needs to their location at the desired time.  Vehicles arrive fully fuelled.  There is no limit to how often members can switch vehicles within a given month.  

“As customers continue to explore the growing mobility market, service-related offerings are becoming more in demand. With Access by BMW, our members will enjoy the freedom of personal mobility with access across a broad range of our highly emotional vehicles” said Ian Smith, CEO of BMW Group Financial Services USA and Region Americas.  

“Subscription-based services are of emerging interest for our customers, and we’re excited to be offering a mobility service to meet their individual and evolving needs.”

During the pilot phase, Access by BMW memberships will be offered in two tiers ranging from $2,000 – $3,700 per month, inclusive of vehicle maintenance, insurance and BMW Roadside Assistance.  Additional tiers allowing even greater access to a broader range of BMW vehicles will be added as the program expands. 

“A pilot program is a great opportunity for us to learn.  In the future, the nationwide network of BMW dealers will be integral to the success of Access by BMW,” said Smith. 

“We will depend heavily on their close collaboration to continue to meet and exceed consumer expectations, and to ensure the sustainable development of this new business model.”


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Self-driving Uber car kills pedestrian

One of Uber’s autonomous cars

In a historic first for the self-driving car industry, a woman in Arizona has died after being hit by a self-driving car, operated by Uber.

It is the first known death of a pedestrian struck by an autonomous vehicle on public roads.

The Uber vehicle was operating in autonomous mode with a human safety driver behind the wheel when it hit the woman.

The woman was crossing the street outside of a crosswalk, according to a statement from Tempe Police.

Uber said it had suspended testing of its self-driving cars in Tempe, Pittsburgh, San Francisco and Toronto.

“Our hearts go out to the victim’s family. We are fully cooperating with local authorities in their investigation of this incident,” an Uber spokeswoman, Sarah Abboud, said in a statement.

The fatal crash will most likely raise questions about regulations for self-driving cars. 

States are starting to allow companies to test cars without a safety person in the driver’s seat – this month, California said that, it would start allowing companies to test autonomous vehicles without anyone behind the wheel.

Arizona already allows self-driving cars to operate without a driver behind the wheel. The state has promised that it would help keep the driverless car industry free from regulation. Consequently, technology companies have flocked to Arizona to test their self-driving vehicles.

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Ford, GM defy September predictions in United States

General Motors and Ford have exceeded analysts’ expectations in the United States with increased share prices and sales for the month of September.

General Motors chief economist Mustafa Mohatarem said all the key US economic indicators point toward continued economic growth and stability, while in addition, regions devastated by the recent hurricanes will continue to recover, helping spur new and used vehicle sales.

Reuters reports that the seasonally adjusted annualized rate of U.S. car and light truck sales in September rose to 18.57 million units from 17.72 million units a year earlier, according to Autodata Corp, which tracks industry sales.

According to car makers and dealers, much of the September gains follow the devastating hurricanes that have swept the southern part of the country. Replacing cars will boost U.S. new and used auto sales through at least November, according to industry consultants.

Shares of General Motors rose, up 2.7 per cent yesterday, while those of Ford gained 1.8 per cent, after both car makers reported better than expected sales for September.


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Toyota, Mazda to build joint EV plant

Executives announced the partnership at a conference in Tokyo over the weekend.

Japanese rivals Toyota and Mazda have announced they will join forces to build a $2.2 billion electric car factory in the US.

Toyota has also announced a plan to take a five per cent share of Mazda Motor Corp as part of the new joint venture.

The plant will be capable of producing 300,000 vehicles a year, executives told journalists at a news conference in Tokyo, and will employ approximately 4,000 people. Vehicle production is slated to begin in 2021.

Reuters reports that future EVs will include a Toyota Corolla and a Mazda crossover utility vehicle.

“There will be new rivals appearing – Apple, Google – these are IT companies, we also need to compete with them too,” said Toyota president Akio Toyoda.

Toyoda said that the development of electric vehicles and alternative energy, which he has been overseeing in the company since last year, was different than traditional combustion engines.

“There are no nautical charts for us to follow,” he added. “It’s without precedent.”

Toyota has previously set a goal for all vehicles to be zero emission by 2050. Until now, the top-selling car maker has been investing heavily in hydrogen fuel-cell vehicles over EVs, which it said are best suited for short-distance commuting.

Toyota and Mazda are the two of the top-selling passenger car brands in New Zealand, taking out first and third place respectively in both new and used passenger vehicle sales last month.

A future mass-produced Toyota EV would cause a storm amongst electric Kiwi drivers; the major electric-powered Toyota model currently on the market, the Prius, was New Zealand’s top-selling hybrid and eighth highest-selling used vehicle overall in July. 

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US sales fall

US sales of cars and light trucks fell for the fifth month in a row, as major car makers continue to cut rental fleet sales.

Sales dropped to a seasonally adjusted annual rate of 16.69 million, down 4.9 per cent from last year’s annual record of 17.55 million.

GM, Ford, Fiat Chrysler, Nissan and Hyundai all said they sharply reduced rental car sales in July, choosing to put profit ahead of sales volume, Reuters reports.

As vehicle stock continues to increase in the US, car makers have sold excess cars to rental fleets at a low margin in a bid to avoid factory shutdowns.

Combined sales of large pickup trucks fell four per cent, according to Reuters, and sales of large SUVs declined 20 per cent.

The Ford F-Series (which includes the Ranger in New Zealand) was the only major truck model to see an improvement, with July sales up 5.8 per cent compared to 2016.

Sales of the Toyota RAV4 had the highest increase among the 20 top-selling vehicle models, up 31 per cent.

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Ford CEO revisiting company plans

Ford CEO Jim Hackett

Ford’s chief executive Jim Hackett is reviewing the car maker’s future product programmes, including plans to build a commercial autonomous vehicle by 2021, and its operations in India, according to company officials.

Hackett took the reins as Ford CEO in May, and told investors he was working on a 100-day review of operations.

Details have been thin, but so far, Hackett has indicated that Ford will look at its luxury vehicle brand Lincoln, the future of its small vehicles and investments in emerging markets.

Ford’s chief financial officer, Bob Shanks, told Reuters that the review will cover a range of issues at the car maker, including Ford’s Indian strategy, saying “we have a lot of work to do as we address issues of how to fix India.”

“Everything is on the table,” Shanks added. “Some big decisions will be made.”

Hackett aims to address the challenges which has seen Ford’s share price decline eight per cent this year.

As well as the Lincoln brand and the self-driving commercial ride-sharing fleet, currently scheduled for launch in 2021, Hackett is reviewing other arms of the business.

One of these is the production of small cars such as the Ford Fiesta, which are built in multiple factories around the world. With demand beginning to slow, Hackett is assessing whether or not the production lines could be consolidated.

Hackett is also said to be questioning current plans to rebuilt at least half a dozen future models, Reuters reports. These include replacements for the Ford Mustang and Explorer on a new flexible platform that is designed to accommodate both front- and rear-wheel-drive vehicles.

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Marijuana found in Fusions

Investigators are trying to work out how a shipment of marijuana, worth $(US)1 million was hidden in the boots and spare wheel compartments of a group of brand new Ford Fusion vehicles.

The cars were manufactured at the Ford plant in Hermosillo, Sonora in Mexico and sent by rail to a dealership in Ohio.

The haul was packed in the spare tire wheel wells and according to Silverio Balzano, agent in charge of the Drug Enforcement Administration’s Youngstown office says someone forgot to pick them up on the way. “Clearly something went wrong,” he told news agency, CNN.

The July incident is not the first and in March, police in Dilworth, Minnesota, also discovered drugs packed in the spare wheel spot of a group of Ford Fusions.

“We’re aware of the situation and are taking it very seriously,” a Ford Motor Company spokesman said recently. “We are working with the FBI and Customs on an extensive investigation. We have confirmed that this is not happening at our plant or at our internal shipping yards.”

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Kia Motors tops consumer quality survey

The Kia Sorento was the top-ranking midsized SUV

Kia Motors has topped the JD Power Quality Study of new vehicles sold in the US, based on owner responses, for the second year in a row.

Hyundai Motors’ Genesis marque came second in the survey, followed by Porsche.

The RAM nameplate and the Ford brand shared fourth place.

At the bottom were Fiat, Jaguar and Volvo.

The most improved brand was the British-made MINI, with fewer problems reported by owners than in 2016.

The survey also included ranking of vehicles by category. The Kia Sorento took out best midsize SUV, the Kia Niro best small SUV, the Toyota Camry best midsized car, the Chevrolet Sonic best small car, and the MINI Cooper was ranked best compact sporty car.

The survey was conducted by consulting firm JD Power and questioned 80,000 US owners of 2017 vehicle models about the problems they had in the first 90 days of ownership. Vehicles across 32 different makes were ranked on nine quality factors, including body and mechanical, powertrain, design, and features and accessories.

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US sues Fiat Chrysler for emissions cheating

The US Justice Department has filed a lawsuit against Fiat Chrysler, accusing the car maker of illegally using software to bypass emissions testing regulations in over 104,000 diesel vehicles, namely Jeep Grand Cherokee and Dodge RAM trucks, sold since 2014.

Fiat Chrysler denies any wrongdoing and said on Tuesday it was disappointed that the US had filed the suit. According to Reuters, a spokesperson said the car maker would defend all allegations “it engaged in any deliberate scheme to install defeat devices to cheat U.S. emissions tests.”

The lawsuit alleges Fiat Chrysler installed ‘defeat devices’ between 2014 and 2016, which led to illegal levels of nitrogen oxide, and asks the district court to order a fix on all affected vehicles and a sales ban.

The civil case could result in a fine of up to $64,200 for each vehicle sold after November 2015, when news of the emissions scandal first broke worldwide, and $52,300 for those sold prior to this date – a total of over $6.5 billion, according to Reuters.

It’s not the first time Fiat Chrysler has found itself int he middle of an emissions scandal. In January, the EPA and the state of California filed a separate lawsuit against the car maker alleging the use of defeat devices. German transport minister Alexander Dobrindt also called for the affected vehicles to be pulled from European markets.

Both vehicles at the centre of the lawsuit are available for sale in New Zealand through certain dealers. New Zealand has no emissions standard testing or requirements for diesel vehicles, and the government currently has no plans to introduce any in the future.

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First supplier in 20 years to build in Detroit

American car-parts manufacturer Flex-N-Gate is set to open a Detroit factory, which locals say is the first investment by an automotive supplier in decades.

“This is the largest automotive supplier investment in Detroit in more than 20 years,” says Detroit mayor Mike Duggan. “We’re starting to compete and win again.”

Illinois-based Flex-N-Gate will invest $95 million in the factory, Reuters says, which will employ between 400 and 700 workers and supply parts to nearby Ford operations.

The company manufactures plastic exterior car parts, including headlights and front ends, and was founded in 1956, producing aftermarket parts before expanding into original equipment in 1968.

Flex-N-Gate owner Shahid Khan told Reuters the deal with Ford was the “great impetus” behind locating the factory in Detroit and says his company will strive to employ locals. The factory will be heavily automated, he says, “in order to pay people a living wage.”

Many factories in Detroit, once the beating heart of the American auto industry, lie abandoned, and only General Motors and Fiat Chrysters still have manufacturing operations within the city. The population is less than half its 1950’s peak, with 700,000 residents, and the city declared bankruptcy in 2013 following the Great Financial Crisis.

The Trump administration has forced new scrutiny on the industry in the US, with car makers compelled to reconsider domestic production under the threat of harsh overseas tariffs and penalties.

But Khan told Reuters the decision to build the Detroit factory predated Trump’s campaign and election and says “you have to have a social conscience. You can do that and still make investments like this”.

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