An angry Berlin has responded with a staunch defense of its policies after President-elect Donald Trump criticized German Chancellor Angela Merkel in two separate Sunday interviews, one with Germany’s Bild and one with the Sunday Times, for her stance during the refugee crisis while threatening a 35% tariff on BMW cars imported into the US.
Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, said on Monday morning that a tax on German imports would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains. “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina],” Gabriel, leader of the centre-left Social Democratic party, told the Bild newspaper in a video interview.
“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive.” Playing Trump’s threat off Congress, Gabriel added that he “would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump” as quoted by The Guardian.
In his interviews with Bild and the Times, the US president-elect had indicated that he would aim to realign the “out of balance” car trade between Germany and the US. “If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”
So, when asked what Trump could do to make sure German customers bought more American cars, Gabriel had a simple suggestion: “Build better cars.”
Volkswagen AG confirmed on Tuesday it has negotiated a $4.3 billion draft settlement with U.S. regulators to resolve its diesel emissions troubles and plans to plead guilty to criminal misconduct.
The guilty plea is part of the civil and criminal deal as the automaker looks to restore its tarnished global brand. Volkswagen said with the addition of the fine, its diesel costs will exceed the nearly 18.2 billion euros ($19.2 billion) it has set aside to handle the problem. VW also said it will face oversight by an independent monitor over the next three years.
Reuters reported earlier the company’s supervisory board is set to meet on Wednesday to approve a civil and criminal settlement with the U.S. Justice Department over the automaker’s diesel emissions. VW said the supervisory board and the management board would meet Tuesday or possibly Wednesday to approve the deal.
VW is expected to plead guilty as part of the settlement as early as Wednesday, a source familiar with matter said. The plea deal will need the approval of a U.S. judge.
Evercore ISI said in a research note it believes the “settlement is intended to draw a line under all remaining U.S. related legal risk. This is good news.”
VW had raced to get a deal done before President Barack Obama leaves office on Jan. 20. A change in administration could have delayed a final settlement for months if not longer.
Stocks climbed Wednesday as Wall Street posted a second straight day of gains in the new year and the Dow once again approached the 20,000 milestone.
The Dow Jones industrial average ended up 60 points, or 0.3%, to 19,942.16. The blue-chip index rose has come close to topping 20,000 several times in recent weeks but each time it gets near has pulled back. The Standard & Poor’s 500 index rose 0.6% and the Nasdaq composite index gained 0.9%. Both the S&P 500 and Nasdaq are near their record closing highs.
Stocks maintained their gains following the release of the minutes from the latest Federal Reserve meeting that provided clues to why policymakers raised interest rates in December for only the second time since 2006 and forecast three rate hikes in 2017 instead of the two moves previously anticipated.
Fed officials said they might have to raise interest rates faster than anticipated to prevent rapidly falling unemployment and President-elect Donald Trump’s proposed fiscal stimulus from fueling excessive inflation, according to minutes of the Fed’s December 13-14 meeting.
Benchmark U.S. crude was up 1.8% to $53.24 a barrel in New York. It lost $1.39 on Tuesday.
China will soon slap a penalty on an un-named U.S. automaker for monopolistic behaviour, the official China Daily newspaper reported on Wednesday, quoting a senior state planning official.
Investigators found the U.S. company had instructed distributors to fix prices starting in 2014, Zhang Handong, director of the National Development and Reform Commission’s price supervision bureau, was quoted as saying.
News of the penalty comes at a sensitive time for China-U.S. relations after U.S. president-elect Donald Trump called into question a long-standing U.S. policy of acknowledging that Taiwan is part of “one China”.
Beijing maintains that self-ruled Taiwan is a wayward province of China and has never renounced the use of force to take it back.
Zhang was quoted in an exclusive interview with the newspaper as saying that no one should “read anything improper” into the timing or target of the penalty.
Jaguar Land Rover, the luxury carmaker owned by India’s Tata Motors, reported a 19% jump in November sales in the U.S., aided by demand for new Jaguar models and higher incentives.
Jaguar Land Rover sold 9,040 cars and sport utility vehicles in the U.S. last month, compared with 7,604 vehicles a year earlier, making it the best-ever November sales, the company said in a statement on Friday.
JLR’s performance continued to outpace the broader U.S. auto industry, which reported a 3.7% growth last month on the back of hefty discounts. Still, the annualized U.S. auto sales in November stood at 17.87 million vehicles, compared with 18.25 million a year earlier, Reuters reported, citing Autodata.
Analysts say industrywide sales remained strong, helped by higher incentives as well as increased consumer confidence following the U.S. election.
“We continue to see the U.S. market plateauing at a high level and believe the market should remain above 17 million over the next few years,” Macquarie Research said in a note.
The GST Council has announced the final tax structure ranging from 5 percent to 28 percent and in general that isn’t good news for all of the automotive industry. As per the GST Council’s announcement, the tax rates decided under the GST structure are 5 %, 12 %, 18 % and 28 %. All cars except the luxury segment will fall under in the segments below 28 percent. Clarity on which segments will be subjected to what rates is yet to be made clear but small cars could benefit from incentives and fall in the smaller brackets.
Luxury car, a segment that hasn’t been defined yet, will be subjected to 28 % tax plus cess. This could result in the cost of CBUs (Completely Built Units) being pushed north further from an already high rate. Every other car though will be taxed under the 28 percent slab but the segment classification is awaited.
The end result of the GST tax structure on various classifications of cars is yet to be seen. However, if the classification of luxury includes carmakers, who are assembling vehicles in India and also localising components, it could force them to redraw their Indian strategy. Mass market cars are not expected to be affected much by the new tax structure.
Stay tuned for more details on how the new GST tax structure will affect car prices across segments.
Ever wonder how car sales have been so remarkably strong over the past 7 years as the economy has seemingly stagnated? Sure, a massive subprime auto lending bubble has helped fuel auto sales as $0 cash down, 0% interest and 70 month terms have become the norm for people looking to “manage” monthly payments…though we’re sure that buyers making $30k a year really can afford that new $80,000 vehicle. And, of course, government programs like “cash for clunkers” has also helped to fuel the recovery.
But, as Bloomberg points out today, there might be a little more to the story, at least at Fiat Chrysler. It seems that the FBI has become interested in whether or not Fiat Chrysler forced dealers to falsify vehicles purchases in order to manage monthly sales figures. Apparently, all fraudulent activities were handled through Fiat Chrysler’s “Department of ‘unnatural acts.'” Per Bloomberg:
Investigators are examining whether Fiat Chrysler improperly adjusted monthly numbers to show growth over the prior year, a person familiar with the matter said. They are looking into allegations the company ordered dealers to create false vehicle purchases, some of which were made in the names of friends and relatives of salespeople, including underage family members, the person said.
The allegations get even stranger. Investigators are probing calls from Fiat Chrysler officials to dealers saying its department of “unnatural acts” was open for business, the person familiar said. The question is whether those calls had any relationship to allegations that company officials were urging dealers to falsify sales to meet reporting targets, the person said.
General Motors (GM) has decided to put its earlier announced $1 bn investment plan on hold for an undefined period of time, reports ET NOW. The investment announced last year was aimed at turning India into a global export hub as domestic sales continued to be disappointing for the company. The decision had been announced at time when GM announced to shut down its plant in Halol, Gujarat,with leaving the company with just one plant in Talegaon, Maharashtra.
The reason for deferring the investment has been cited as a change in strategy to not limit the Indian market to the role of a an export hub but also have a profitable domestic business. The company earlier had planned to make vehicles underpinned on the Global Emerging Market (GEM) platform in India for exports. GEM platform has been specifically designed for entry-level compact cars that meet the requirements commonly found in emerging markets such as India, China and Brazil. With the renewed focus on stabilising the Indian sales and performance first GM has its task cut out.
Two weeks after the world woke up to the U.K.’s decision to leave the European Union, India’s Tata Motors is still trying to make sense of the ramifications. But the impact will be broad, likely affecting the country’s entire auto industry.
In an internal report revealed just days before the fateful June 23 referendum, Tata unit Jaguar Land Rover predicted a 1 billion pound ($1.29 billion at current rates) hit to annual profits from Brexit. The document listed several negative consequences of walking away from the market, including the re-establishment of high tariffs between the U.K. and the EU. Its concerns have now become reality.
Acquired by Mumbai-based Tata Motors in 2008, Jaguar Land Rover is a British icon. Its cars are sold around the world, but its main market is Europe. It sells a fifth of its vehicles in the U.K. and another 24% in the rest of Europe. It churns out 500,000 units every year in the U.K. — more than any other automaker in the country.
The carmaker does not produce finished vehicles on the continent. Instead, it procures nearly 40% of its parts there and assembles them into finished cars for exports back to the continent. Brexit will disrupt its supply chain, which hinges on British membership in the EU.
The Supreme Court of India is considering lifting the ban imposed on the registration of diesel vehicles with engines greater than 2,000cc.
The Supreme Court of India is considering lifting the ban imposed on the registration of diesel vehicles with engines greater than 2,000cc. Vehicles such as the Toyota Innova Crysta, ToyotaFortuner, Tata Safari and multiple cars from German automaker Mercedes-Benz’ portfolio were affected seriously by the ban. The consideration comes as a sign of relief for automakers and buyers alike. A one-time levy of ‘Green Cess’ is being considered instead.
The bench associated with the matter, comprising of Chief Justice T S Thakur, Justices A K Sikri and R Banumathi expressed, “We are inclined to allow registration. We are open to the registration subject to some kind of one-time cess.” Earlier, Mercedes-Benz and Toyota had offered to deposit one per cent of the ex-showroom price of such cars as cess. However, the authorities have not yet reached a concrete decision and the next hearing is scheduled on July 4, 2016.
Meanwhile, the bench also asked senior lawyers representing automobile companies to come up with an appropriate proposal. “Can you (lawyers for auto firms) ask your people to work out details as to what may be the cess to be levied on such vehicles with regard to the showroom price, etc,” the bench said.