Category: Auto

BMW, Daimler caught in crossfire of US-China trade row

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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German carmakers BMW and Daimler are under increasing pressure to diversify production of their sports utility vehicles (SUVs) outside of the United States as a result of Washington’s growing trade tensions with China.

Beijing’s proposed 25% tax on US car factory exports which will soon hit nearly 270,000 vehicles, with German carmakers accounting for $7 billion of the $11 billion total.

“This is a tax on Southern Germany, not the US,” analysts at Evercore ISI said on Thursday. “A 25% additional auto tariff would represent a $1.73 billion negative tariff impact directed at Southern Germany by China.”

BMW, the largest vehicle exporter from the United States in terms of value, has its largest factory in Spartanburg, South Carolina and faces a $965 million impact from tariffs, with Daimler exposed to a $765 million hit, Evercore ISI said.

The company makes its X3, X4, X5, X6 and X7 sports utility vehicles in Spartanburg, and the trade dispute will only add pressure to move production of volume sellers like the X5 to markets outside the United States, a senior BMW source said.

But any switch from one factory to another costs millions of euros, takes months to implement, and is taken with a long-term view, BMW board member Peter Schwarzenbauer said last month.

“We have to make decisions, like about factories in Spartanburg or factories in Mexico, which are based on a horizon of 20 to 30 years. If we were to change our strategy whenever a tweet comes out, we would get crazy,” he told Reuters.

HARMFUL FOR ALL

Around 18% of all BMWs sold in the world’s largest car market were exported from Spartanburg last year, a total of 100,203 cars and the carmaker warned that a further escalation of the trade row “would be harmful for all stakeholders”.

China has threatened to double tariffs to 50% on imported automobiles and other US-made goods to retaliate against US President Donald Trump’s proposed tariffs on products including vehicles and automotive parts.

“The BMW Group stands for free trade worldwide: Our company has a global production network and a global sales market,” it added in a statement late on Wednesday.

BMW this year quietly stopped exporting the X3 from the United States to China amid escalating trade tensions, moving the production footprint of the X3 to a plant in Rosslyn, South Africa and another in Shenyang, China.

“35% of those (vehicles) exported to China were the BMW X3, which is no longer exported from Spartanburg to China,” BMW said.

The move to ramp up production capacity in China also stems from tightening requirements by Chinese regulators to increase sourcing of components from local suppliers.

Daimler, parent company of Mercedes-Benz, declined to provide specific export figures from the United States to China and said: “We don’t speculate about ongoing negotiations. We are of course monitoring the situation closely.”

Other companies that will be affected include Tesla, which ships an estimated 15,000 cars a year to China from its California plant and Ford.

Decisions on whether and where to shift vehicle production could be complicated by moves to significantly revamp or withdraw from the North American Free Trade Agreement that allows tariff-free shipments of vehicles to the United States from Mexico and Canada.

BMW shares were trading up 0.55% at 87.9 euros at 1047 GMT, while Daimler stock was up 1.47% at 69.12 euros. Both lagged Germany’s blue-chip DAX index, which was 1.9% higher.

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Three out of every five Indians use mobile phones while driving, says survey

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Three in every five Indians admitted using mobile phones while driving. North India with 62 percent leads as compared to South with 52 percent, a survey said here on Friday.

According to a Nissan Connected Families of India survey, only one in four Indians have admitted that they have been caught by policemen breaking this law.

“Over-speeding additionally posed another problem as 60 percent of respondents admitted to over-speeding in Kerala, followed by 51 percent in Delhi, and 28 percent in Punjab,” said the survey conducted in collaboration with Nissan India and Kantar IMRB.

The survey analysed the day-to-day driving habits of Indians across 20 states, ranging from over-speeding, phone usage, punctuality and vigilance to trust.

It pointed out that a large percentage of women respondents (nearly 64 percent) trust their spouse when it comes to driving, as against just 37 percent of men who could say the same.

Children, however, scored consistently low on the trust score with 30 percent respondents rating them the least, the survey noted.

“The findings of the Nissan Connected Families of India survey have not only revealed some startling facts but also raised a need for in-car technology and connectivity for safety of the loved ones,” said Jerome Saigot, Managing Director, Nissan Motor India.

“This has been further affirmed by the fact that 53 percent respondents expressed the desire to be connected to their family even while driving,” he added.

The survey highlighted that about 68 percent Indians confessed to always getting lost while driving to a new place, often leaving their families worried and anxious.

“Moreover, nearly 64 percent of the respondents admitted to getting late for meetings. This trend varied from North to South, as 65 percent respondents in Kerala conceded to failing in keeping time commitments as opposed to 48 percent in Punjab,” it added.

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Rural light commercial vehicle market still strong, says Ashok Leyland

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rural light commercial vehicle sales will remain healthy, if interest rates stay low. That is the word coming in from commercial vehicle manufacturer, Ashok Leyland. The company, which rolled out its 200,000th LCV on March 31, is hopeful of continuing robust performances in the rural segment, according to Company President (LCVs) Nitin Seth.

“Presently, 60% of our LCVs are sold in rural markets,” said Seth. “If interest rates harden, demand could dampen. But the worst case scenario will still see a 10 to 12 percent growth in rural markets, this year.”

Ashok Leyland recently went public with plans to launch six LCV products in the next 14 months. At present, the company has products only in the 2.5 and 7.5 tonne category. But Seth now says this will change once Leyland’s product platform is ready by 2020. “The new platform will address all segments in between, across electric, diesel and CNG products.”

“Once electric buses are produced, the first of our electric LCVs could hit the roads in about two to three years from now”, he added.

Later this month, Leyland will launch its first left-hand-drive products, which will hit the Russian and Gulf markets in August. The company admits that doing business in these markets won’t be easy. “There are established players operating here, but an uptick in exports can be expected in September and October,” said Seth.

At present, nearly 24% of Ashok Leyland’s portfolio is accounted for by the LCV segment, with Seth predicting that the segment could occupy nearly 40% of the company’s volumes in three years from now.

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BMW could face big hit from China’s US tariffs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Analysts at Sanford C. Bernstein are saying that BMW, Mercedes-Benz and Tesla are the biggest potential losers from higher Chinese tariffs on U.S. auto imports.

Bernstein said in a note that BMW sends 89,000 vehicles annually from the U.S. to China while Daimler AG’s Mercedes-Benz ships 65,000. Tesla sells about 14,000 but China accounts for around 15 percent of forecast Model S and X sales this year.

If enforced, the measures announced by Beijing earlier would increase tariffs on cars from the United States to 50 percent from the usual 25 percent.

BMW is headquartered in Munich, Germany but claims the title of biggest U.S. car exporter by shipping vehicles including its X5 SUV from its Spartanburg, South Carolina plant. Stuttgart-based Daimler builds Mercedes in Vance, Alabama.

The Bernstein team raised the question of whether the threat of a U.S-China trade war could “nudge the Germans toward localization” — that is, moving production to China.

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10:00 a.m.

China says it has made a “request for consultations” at the World Trade Organization in response to U.S. tariffs against Chinese products.

The Chinese Ministry of Commerce confirmed the step taken Wednesday at the Geneva-based trade body, which triggers the WTO’s dispute settlement mechanism that will begin with consultations between the two countries.

China said the request centers on a proposed product list subject to the additional tariffs under U.S. Section 301 rules.

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8:15 a.m.

Commerce Secretary Wilbur Ross is brushing off concern over trade war with China. In an interview with CNBC Wednesday morning, Ross said that tariffs imposed by China amount to 0.3 percent of U.S. GDP and that some action on tariffs has been “coming for a while.”

“What we’re talking about on both sides is a fraction of 1 percent of both economies,” he said.

The larger concern, Ross said, is the protection of U.S. intellectual property.

Still, U.S. stock futures slumped over concerns that the back-and-forth tariff actions will stunt trade and growth. Ross said he would not comment on the stock market’s reaction, but then said he thinks “it’s being out of proportion.”

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All times below this point are local time for Beijing.

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7:50 p.m.

President Donald Trump says the U.S. lost a trade war with China “years ago.”

In a tweet Wednesday after China announced a list of U.S. products that might be subject to a 25 percent tariff, Trump said: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”

China announced tariffs worth $50 billion on a series of U.S. products including soybeans, whiskey and cars.

Chinese officials said they were obliged to act after the U.S. announced plans for retaliatory tariffs in an escalating dispute over China’s technology program and other trade issues.

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7:00 p.m.

The chairman of the American Chamber of Commerce in China says Beijing’s potential retaliation in an escalating dispute with Washington is a concern for every U.S. company doing business in China.

William Zarit told The Associated Press in an interview Wednesday that proposed tit-for-tat tariff hikes by both sides would first hit global stock markets.

Zarit said he still hopes Washington and Beijing will not follow through on their threats.

Instead they should work toward a “serious negotiation.”

U.S. business groups mostly agree that something needs to be done about China’s aggressive push in technology. But they worry that China’s measures targeting U.S. exports of aircraft, soybeans and other products could help bring on a tit-for-tat trade war of escalating sanctions between the world’s two biggest economies.

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6:40 p.m.

A senior Chinese commerce official has defended the official technology policy at the center of an escalating trade dispute with the United States.

Wang Shouwen, a deputy commerce minister, told reporters Wednesday that the long-range industrial strategy known as “Made in China 2025” is open to foreign companies, including American firms, and to private companies, not just state-owned enterprises.

The policy calls for creating Chinese global leaders in electric cars, robots and other fields.

Wang said the plan, which lays out specific targets for domestic brands’ share of the market in some sectors, should be seen as a guide rather than mandatory.

Foreign business groups complain that strategy will limit or outright block access to those industries.

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6:00 p.m.

A Chinese foreign ministry spokesman has urged the U.S. to come to the table and discuss an escalating trade dispute.

Ministry spokesman Geng Shuang told reporters in Beijing on Wednesday that China’s door to dialogue with Washington remains open “but the U.S. has missed the opportunity time and time again.”

Geng made the comments after Beijing announced plans to raise tariffs on imports from the U.S.

He said talks between the two countries require “mutual respect and equal treatment, instead of being coerced by one party unilaterally and condescendingly.”

Geng added that neither side should be “threatening the other with senseless and unreasonable demands.”

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5:50 p.m.

European stock markets have fallen sharply after China announced a series of tariffs on U.S. goods, stoking fears that the two countries were on the brink of a full-scale trade war.

Among the region’s major indexes, Germany’s DAX was down 1.2 percent while the FTSE 100 index fell 0.4 percent, in the wake of China’s decision to raise tariffs on $50 billion of U.S. goods including soybeans, aircraft and automobiles. China was responding to Washington’s equivalent duties on Chinese goods.

Joshua Mahony, market analyst at IG, said it’s “no surprise that we are seeing traders flock to safe havens in response, with gold and the yen both sharply higher throughout the morning’s trade.”

Gold, for example, was up 0.8 percent at $1,347.40 an ounce.

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5:30 p.m.

A senior Chinese finance official has warned that attempts by foreign countries to pressure China on trade will fail, striking a firm note as Beijing announced proposed tariff hikes on American goods in response to planned U.S. duties.

Zhu Guangyao, China’s deputy finance minister, said Wednesday that Beijing hopes both sides can work together in a constructive manner, “instead of acting in a willful way.”

He made the comment at a briefing to discuss China’s plans to impose a 25 percent tariff hike on U.S. soybeans, autos, aircraft and other goods valued at $50 billion.

Zhu said that China never gives in to outside pressure and that “pressure from the outside will only urge and encourage the Chinese people to work even harder” and to innovate and develop.

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5:15 p.m.

A senior official with China’s Commerce Ministry says Beijing will keep the door to negotiations with the U.S. open, after announcing a plan to impose tariffs on $50 billion worth of U.S. goods in response to proposed U.S. tariffs.

Wang Shouwen, a vice minister of Commerce, said Wednesday at a briefing with reporters that Beijing doesn’t want a trade war but will fight one if forced to.

Wang said Beijing was willing to resolve these disputes with the U.S. through dialogue on the basis of “mutual respect and mutual benefit.”

Wang said: “If anyone wants to fight, we’ll be there with him, if they want to negotiate, the door is open.”

___

4:20 p.m.

China has raised tariffs on $50 billion of U.S. goods including soybeans, aircraft and automobiles in response to Washington’s increased duties on Chinese goods in a technology dispute.

The Commerce Ministry on Wednesday criticized the U.S. move as a violation of global trade rules and said China was acting to protect its “legitimate rights and interests.”

It said a 25 percent tariff would be imposed and the date the charges will take effect would be announced later.

The dispute stems from U.S. complaints that Beijing pressures foreign companies to hand over technology in return for market access.

Companies and investors worry the conflict could dampen worldwide commerce and set back the global economic recovery.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government looks to sweeten deal for electric vehicle makers under FAME policy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Union Government is looking to provide incentives to electric vehicle manufacturers in India under the second phase of the FAME policy, by providing capital expenditure benefits to original equipment manufacturers, sources said.

A percentage of investments made on the manufacturing plant & machinery are likely to be given back to OEMs as direct subsidy, under the government’s  Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India policy.

The move to sweeten the prospects for companies manufacturing batteries and hardware for EVs under the government’s  Make-in-India policy.

Japanese car-maker Suzuki Motor is seen as a beneficiary of this move. The company, along with Denso, is setting up lithium ion battery plant in Gujarat.

The government is also mulling creating a separate Rs 2,000 crore venture capital fund for EV related projects. The ​second phase of the FAME policy is set to be sent for approval to the Finance Ministry shortly.

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Truck sales in the US surge 102% in March 2018

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Auto sales up 6.3 percent in March as SUV, pickups dominate U.S. auto sales grew 6.3 percent in March on rising sales of SUVs and pickup trucks.

Automakers sold more than 1.6 million vehicles for the month as buyers came out of hibernation after a cold, snowy winter in much of the country

Truck and SUV sales rose 16.3 percent while car sales plunged 9.2 percent, according to Autodata Corp. Nearly two-thirds of all vehicles sold were trucks or SUVs.

Jeff Schuster, a senior vice president at the forecasting firm LMC Automotive, said the strong month was a good recovery from a lackluster start to the year, but much uncertainty remains over politics, potential trade wars and a volatile stock market.

“All in all, it looks like consumers are starting to get used to the noise,” said Schuster, who added that the strong March won’t cause him to change his full-year sales prediction of just under 17 million, down 1.4 percent from last year.

Monthly sales reports may become a thing of the past if other automakers follow General Motors. The company announced Tuesday that after March, it would stop reporting monthly sales in favor of quarterly numbers.

Here’s how individual automakers fared in dealer showrooms last month:

— General Motors posted the biggest sales increase at 15.7 percent to 296,138 vehicles. It was led by the Buick brand with a 28 percent increase.

— Fiat Chrysler reported almost a 13.6 percent increase to 216,063 vehicles. It was led by a 45 percent increase in sales of the all-SUV Jeep brand.

— Ford said its sales rose 3.5 percent to 243,021. Ford brand sales were up 3.7 percent.

— Toyota sales also went up 3.5 percent to 222,782, led by Toyota brand sales, which rose 4.5 percent.

— Nissan reported a 3.7 percent sales decline to 162,535. Nissan brand sales dropped 3.6 percent.

— Honda reported a 3.8 percent increase to 142,392. It was led by the Acura luxury brand, which saw a 15.7 percent increase.

— Hyundai sales were off 11 percent to 61,540 as the car-heavy Korean brand struggled in a market that’s shifting to SUVs.

— Volkswagen sales were up 13.5 percent to 52,992 as new SUVs helped it continue to recover from a diesel engine emissions cheating scandal.

(Graphic: CNBC-TV18 Research)

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Over 125 million connected car shipments globally by 2022, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The global connected cars market is expected to grow 270% by 2022 with more than 125 million connected passenger cars with embedded connectivity to be shipped during 2018-2022, a new report said on Tuesday.

According to Counterpoint Research’s “Internet of Things Tracker” service, General Motors, BMW, Audi and Mercedes Benz are leading the global connected car market as of 2017.

The market is expected to get a major boost with EU’s “eCall” mandate and rising adoption in China.

The “eCall” regulation requires all new cars to be equipped with “eCall” technology from April 2018. In the event of a serious accident, “eCall” automatically dials 112 — Europe’s single emergency number.

“In terms of overall penetration, Germany, the UK and the US are leading the market at present with highest percentage of total shipments with embedded connectivity sold in 2017,” Hanish Bhatia, Senior Analyst for IoT and Mobility at Counterpoint, said in a statement.

“The adoption of ‘eCall’ in Europe is expected to create ripples across other geographies, thereby catalysing the overall car connectivity ecosystem,” Bhatia added.

The connectivity platforms such as GM’s “OnStar”, BMW’s “Connected Drive” and “Audi Connect” are offering various services while creating new revenue streams and bridging the gap to stay connected with the consumers.

“Also, much talked about US-based car maker Tesla continues to offer embedded connectivity across its portfolio”, Bhatia noted.

“The market is more aligned towards 2G/3G networks as of now. However, it is moving swiftly towards 4G LTE connectivity and we expect 4G LTE network to account for nearly 90 per cent of connected passenger cars with embedded connectivity by 2022,” informed Neil Shah, Research Director at Counterpoint Research.

“Further, we expect 5G connectivity in cars to kick-in from 2020 onwards,” he added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow