Writing about regulations and trade barriers in the automotive world feels a little bit like being a Giants fan; you can’t ever really accept anything as final. There’s been a strange quirk in the current trade deals that essentially benefitted foreign automakers over American ones. This loophole has been mostly closed, to the benefit of a lot of brands that aren’t Ram.
Yes, The Morning Dump is about trade again, but there’s no big debate this time as the conclusion the White House has come to is mostly sensible. Also sensible is the pick for Porsche’s new CEO, who seems to be setting the brand up for potentially more hybrids in the future.
While automakers have generally lowered profit forecasts this year due to trade, there’s one segment of the automotive world that’s raising them.
BYD is one of those companies going in the wrong direction, though it may have found a great partner in Japan.
U.S. Automakers Get A Long Tariff Break, But The Ram HD Potentially Gets Broken
That Giants joke comes courtesy of my neighbors. I was walking to my parking spot and I heard a plaintive wail emanate out of an apartment in a nearby building. I half-joked to my wife that she didn’t need to call the authorities since it was probably a Giants fan. It wasn’t until I got home and saw the box score that I realized how correct I was.
Ram isn’t in that bad of shape, but it’s currently in an awkward position. I’ll explain.
The current trade situation is extremely complex and even the experts don’t always seem to fully know what’s going to happen or what is or isn’t active. One of the strange quirks is that countries building cars in foreign countries might actually get a better deal than carmakers building vehicles in the United States. That’s the inverse of what was intended with these tariffs.
There are two big reasons for this. The first is that, while there aren’t a lot of signed deals with other countries, there are outlines of deals with countries like the UK and Japan to bring in cars at lower tariffs of 10-15%.
Aren’t cars built in America subject to 0% tariffs? you might ask. Yes and no. Cars assembled in America aren’t subject to an import tax, but all the parts and materials (like steel and aluminum) are. Some of these tariffs are extremely high. This means that an American-built Honda CR-V could be cheaper to import from Japan than build in America because a vehicle built in Japan isn’t subject to any other tariffs. That’s just an example, and I’m not sure that’s the case for that specific vehicle, but you can see how the math could play out.
Automakers like Ford and GM complained about this. and the Trump Administration agreed to give some temporary relief. Here’s the formula for how this works, via the AP:
The amended action provides a rebate of 3.75% relative to the sales price of a domestically assembled vehicle. That figure was reached by putting the 25% import tax on parts that make up 15% of a vehicle’s sales price. Multiplying those two percentages together is equal to 3.75%.
As far as trade related formulas go, that one is relatively simple. If your vehicle sells for $50,000 you’ll get up to $1,875 in rebates to offset the existing tariffs. This was initially planned to only last a short period, but it will now continue until 2030 as a way to give automakers time to adjust their supply chains.
The strange catch here, as always, is with the USMCA. Does this apply to vehicles built in Mexico or Canada that follow USMCA rules? Stellantis better hope so, because with this agreement came some great news for Ford and GM and some terrible news for Ram. Specifically, that the administration is going to add a 25% tariff on imported medium- and heavy-duty trucks and parts.
Ford builds all of its big trucks in the United States, so this is great for them. GM also mostly builds big trucks here and seems to have enough capacity to build all its big trucks here. That’s not the case for RAM, which produces its heavy duty trucks in Mexico. Here’s how this could play out, according to Bloomberg via Automotive News:
Some truckmakers fiercely lobbied for reductions and other stakeholders warned about the potential for sweeping tariffs to cause higher vehicle costs, which could also ripple through the construction and shipping industries. The USMCA exemption could potentially dull the impacts on Ram pickups made by Stellantis in Mexico, representing some of the roughly 245,000 medium- and heavy-duty trucks imported to the U.S. last year, according to Commerce Department data.
A couple of weeks ago Stellantis asked for a waiver for this specific tariff. Ford and GM told the White House to tell Stellantis to pound sand, basically. Where this ends up will be interesting. Does Stellantis chair and largest shareholder John Elkann have the pull? Does the recent work by the company to shift jobs here help? It’ll be interesting to see what happens.
New Porsche CEO Loves Hybrids, Just Like Me
As expected, current Porsche VW Oliver Blume will step down next year. Don’t worry, he’ll still technically be in charge of Porsche because he’s also the CEO of parent company Volkswagen. So who is the new guy?
Former Porsche engineer and McLaren CEO Michael Leiters. As explained by Reuters, this dude loves hybrids:
Leiters worked for Porsche between 2000 and 2013. During that period, his roles included executive assistant to the then-CEO Wendelin Wiedeking and project manager for the brand’s Cayenne plug-in hybrid SUV. He was appointed product line director in 2010, a role that he carried out until leaving for Ferrari.
Leiters worked as chief technology officer for Ferrari between 2014 and 2019. At Ferrari, he helped develop Ferrari’s first two hybrid electric models, the SF90 Stradale and the 296 GTB.
McLaren is also big on hybrids, obviously.
While this is going to be a tough gig, I’m down for more Porsche hybrids.
Toyo Is Making Money, Going To Buy Back Some Stocks And Automate
It’s a hard time to be an automaker right now. A tire company? It seems better, as Toyo Tire Corp. Chief Executive Officer Takashi Shimizu announced in a call where he also expected the company to make more money.
While new vehicle sales in US have softened, orders for pickup and SUV tires are rising, lifting margins through a stronger product mix.
“If new car sales decline, replacement tire demand rises,” Shimizu said. While peers expect the slowdown to weigh on earnings, Toyo Tire has seen orders for pickup-truck tires rise 10% from a year earlier, he added.
So what’s the next step for the company?
Toyo Tire is stepping up automation and digital investment to cut costs and boost productivity as it faces rising labor expenses overseas and a shrinking workforce in Japan. The company aims to use technology and artificial intelligence-driven systems to streamline production and strengthen its global competitiveness.
“We want to reduce headcount per factory to about 500 from the current 1,000 to 1,500 by leveraging tools such as AI,” Shimizu said.
And the company will buy back shares! That’ll be good for employees…
BYD Will Be Able To Sell An EV In Japan For Under $14k
The BYD Dolphin Mini (or Seagull, depending on market) is probably the best example of the affordable, Chinese-style small electric car. In China, it’s a less-than-$10,000 car, though it costs more elsewhere.
BYD just made a deal with mega retailer Aeon in Japan to sell its vehicles via that company and, with local incentives, that’ll end up being a cheap car according to Nikkei Asia:
Chinese electric vehicle maker BYD and Japan’s Aeon will enter into a sales alliance by the end of this year, Nikkei has learned. With the major retail chain’s discounts and incentive programs, consumers will be able to buy an electric car for less than 2 million yen ($13,300).
Aeon will initially set up sections handling the new service inside some 30 of its commercial facilities and general merchandise stores across the nation. The expected deal may change Japan’s conventional automobile distribution structure that is dominated by dealerships affiliated with carmakers.
Aeon will serve as an intermediary on behalf of BYD to receive orders and arrange sales contracts. In the future, it plans to import EVs from the partner. In cooperation with BYD’s dealers in Japan, the retail chain will display EVs inside its outlets and market them to visitors. BYD plans to increase the number of dealers in Japan to 100 by yearend, while Aeon will open the EV sales sections within its commercial facilities that are close to dealers.
I don’t think BYD is going to even attempt to sell cars here, though I’m curious what a BYD Seagull built for America would costs. $25k? $20k?
What I’m Listening To While Writing TMD
What is “Agnus Dei” by The Last Dinner Party even about? Marriage? I’m not entirely sure. This feels like music not made for me. Let’s just say, I don’t see myself in a lot of the band’s protaganists (and hopefully not in any of the antagonists). Still, it gently rocks.
The Big Question
If you could hybridize one vehicle from any automaker what would it be?
Top photo: RAM
Agnus Dei means “Lamb of God,” in Latin and obviously a reference to Jesus.
But lyrics of this song ARE a bit confusing. Nice sound though.
The Last Dinner Party – Agnus Dei Lyrics | lyricsfa.com
> One of the strange quirks is that countries building cars in foreign countries might actually get a better deal than carmakers building vehicles in the United States. That’s the inverse of what was intended with these tariffs.
It’s not a strange quirk so much as a consequence of fiat policy with zero policy making or any kind of expertise behind it. A system as large and complex as the auto industry deserves months of projections, expert math, and diplomacy if you’re going to slap tariffs on it, but no, we don’t have that kind of time when a tweet is coming out any minute now.
The people in charge are so grossly incompetent it’s almost comedic.
The Law of Unintended Consequences seems like it was invented by this band of bozos in office this administration.
“his means that an American-built Honda CR-V could be cheaper to import from Japan than build in America because a vehicle built in Japan isn’t subject to any other tariffs. That’s just an example, and I’m not sure that’s the case for that specific vehicle, but you can see how the math could play out.”
Just bring the Hilux and Everest already….
And some keicars! Start with the fun ones, Daihatsu showed off a new Mira TR-XX at the Tokyo show, complete with stick. Don’t worry about the brand’s short, obscure past here, just badge it Toyota for export.
The Hilux looks so good, meanwhile the new Tacoma is hideous. Wtf Toyota?
We’re not allowed to have nice things.
Hybrid-ize the Nissan Titan. EREV it, anyway.
Then the Frontier
Then the Xterra (which is happening in a few years anyway with its return)
Bonus, they are made in the US. Mississippi and Tennessee, I believe.
Is there any word on if the reciprocal EU/USA vehicle standards will continue to move forward? Being able to get a new Mazda 6 wagon legally would be a silver lining to everything else in this world going down the drain.
No, I also am not sure it would be retroactive, though I dare to dream.
I highly doubt it would be retroactive. But I’m pretty sure the 3rd gen Mazda 6 is still listed for sale on Mazda-Germany’s website.
Hmm… interesting.
Hybridize all the Sprinter-scale vans!!!! Campers built from them would then be very desireable for boondocking.
Wonder how the Blazer for GM and the Maverick for Ford will be affected by the 25% if the Rams get hit?
The question really is not what should be offered in Hybrid form, What needs to be decided is what form and for what price to efficiency ratio should be used.
I dig the idea of a 50 mile on all electric brick like the 4Xe, but the price and in the end the long term reliability of that self same setup is a huge question mark for people. I recall scads of hybrid option ins the early aughts. but rarely see a Hybrid Silverado or first gen hybrid anything really still kicking.