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INDEX

Ontario trade
minister heads
to Washington
to defend
auto industry

______

Ford to pay
$299M to
drivers with
faulty air bags

_______

Ford Fusion
to be name of future rival
of Subaru
Outback,
report says

________

Ontario's been
fighting to get
its automotive
groove back

_______

Goodbye
Fusion sedan,
hello Fusion
sport wagon

________

Appeals court
approves $10B
Volkswagen
emissions deal

_______

Transit van a
quiet giant in
Ford lineup

________

Auto tariffs
would be
'catastrophic'
to Canada and
cost 100,000
jobs, dealers
warn

________

Aging lineup
ails Ford
in China

_______

U.S. auto
tariffs could
cut Canada's
output by
nearly one
million cars,
CIBC says

_________

Advocacy
group seeks
Ford Explorer
recall due
to fumes

_______

FCA's Canadian
plants safe if
Chrysler, Dodge
die, Unifor says

_______

Trump tariffs
could add
$10K to vehicle
price, Global
Automakers of
Canada says

______

Province
Announces
Changes to
Prescription
Drug Coverage
in Ontario

________

Automakers
push back
against
Trump auto
tariff plans

________

 

June 2018
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News

Ontario trade minister heads to
Washington to defend auto industry

July 18, 2018
The Canadian Press

Washington this week to defend the province's auto industry at a U.S. Department of Commerce hearing.

Jim Wilson said he will be speaking Thursday at the public hearing to investigate national security issues around imports of automobiles and automotive parts.

Wilson said he planned to stress the economic benefits of working with Ontario's auto sector.

"It is clear that Ontario is not a national security risk to the United States," he said. "The U.S. and Ontario share many of the same goals — together, we can advance our shared priorities of creating jobs on both sides of the border by developing strong, competitive business environments that spur innovation and growth."

U.S. President Donald Trump has slapped duties on U.S. steel and aluminum imports from Canada and other allies and threatened similar duties on Canadian-made cars and parts.

Wilson called for balanced and fair trade between the two countries, adding that Canada and the U.S. have an integrated supply chain that benefits both.

"One in five jobs in Ontario, or 1.3 million jobs in Ontario, depend on good relations with the United States and our trade relations," Wilson said.

"In the United States, we want to go down there this week and make it clear that nine million jobs (in the U.S.) depend on good NAFTA negotiations with the United States, and that's what I'll be doing at the end of the week."

Wilson's trip to the U.S. comes as Ontario Premier Doug Ford has pledged to work closely with the federal government on trade.

Ford has said he and his ministers would discuss the importance of reaching a new NAFTA deal and added that Ontario will not sit on the sidelines.

Shortly after winning the spring election Ford met with Foreign Affairs Minister Chrystia Freeland and Canada's ambassador to the United States, pledging his help in trade matters.

"It's going to be a full court press," Ford said after the meeting in June. "I'm going to be travelling to every single state because nothing is better than meeting someone eye-to-eye."

 

Ford to pay $299M to
drivers with faulty air bags

Keith Laing,
The Detroit News
July 17, 2018

Washington — Ford Motor Co. has agreed to pay $299 million to drivers of cars with faulty Takata air bags, according to court documents. 

The payouts, included in a settlement filed in federal court in Miami on Monday, intendes to reimburse drivers for expenses incurred while they are waiting for theirs cars to be repaired and provide loaners for drivers whose cars are inoperable until the fix is completed. Takata air bag inflators under recall are prone to explode with sometimes deadly force, especially in humid climates.

Ford joins other automakers including Toyota Motor Corp., Subaru Corp., Mazda Motor Corp. and Nissan Motor Co. in reaching settlements with owners of its vehicles that have been impacted by the Takata recall.

Toyota agreed in 2017 to pay $278.5 million; while BMW agreed to pay $131 million. Mazda Motor paid $76 million and Subaru paid $68 million. Nissan Motor Co. agreed to pay $98 million in a separate agreement that was also reached in 2017. 

Peter Prieto, a court-appointed attorney for plaintiffs in a class-action lawsuit filed over the air bags, said the agreement with Ford will help compensate drivers who were exposed to the possibility of exploding air bags.

Ford has 3.8 million recalled air bags, of which it has fixed 938,000, according to the National Highway Traffic Safety Administration. 

The company urged customers to contact their dealers immediately for free repairs.

"Safety is our priority," Ford said in a statement. "We remain focused on working with our customers to get their vehicles repaired."

Recalls of Takata air bags have spread to nearly 13 percent of vehicles in the United States. The devices have been linked to at least 13 deaths and more than 180 injuries in the United States. Worldwide, 22 have died.

 

Ford Fusion to be name
of future rival of
Subaru Outback,
report says

July 16, 2018
Keith Naughton
Bloomberg

While Ford Motor's Co.'s slow-selling Fusion sedan will fade into history, the name is expected to live on in a sport wagon being developed to challenge Subaru's popular Outback, according to people familiar with the automaker's plans.

The Fusion name probably will live on when the sedan exits early next decade, according to a spokesman. It will be replaced in the showroom by a high-roofed hatchback built on the same mechanical underpinnings, said two people who asked not to be identified revealing future product plans.

Automotive News reported last month that, following dealer pressure, Ford management appeared receptive to the idea of keeping the Fusion name as a post-2021 crossover, similar to what it's doing with the upcoming Focus Active.

Ford shocked the auto industry -- and many of its dealers -- when it announced plans in April to abandon the shrinking sedan market and go all in on higher-profit SUVs, crossovers and pickups. By early next decade, only the Mustang pony car will remain in Ford's U.S. — and most likely also Canada's — lineup. Worried that customers will defect to rivals, dealers have pushed to retain the Fusion name, which just four years ago was such a strong seller that Ford had to add a second factory of production.

"They spent hundreds of millions of dollars for brand equity in that Fusion name -- not US$10 million or US$20 million -- but hundreds of millions," said Rhett Ricart, one of Ford's top dealers, whose showroom is near Columbus, Ohio. "The smart thing is to play on that brand equity."

Ford spokesman Mike Levine declined to speculate on the new Fusion's design while confirming "we'll likely continue to use the name because of its awareness, positive imagery and value with consumers."

FOCUS LIVES

The planned reinvention for the made-in-Mexico Fusion is akin to how Ford is transforming the Focus compact car into a crossover that the automaker will begin making next year in China.

Ford needs to find a way to keep its sedan buyers returning to its showrooms. A trade-in analysis by researcher Kelley Blue Book found that fewer than half of Ford Fusion owners are loyal to the brand. The most popular crossover models that Fusion owners consider are the Honda CR-V and Toyota RAV4, KBB found.

"Ford has a hard time moving people from their cars to SUVs," said Michelle Krebs, a senior analyst with KBB affiliate Autotrader.

CHANGED COURSE

The automaker has been vague on the Fusion's future, even as it revealed it was ending production of the Taurus sedan in March 2019 and the subcompact Fiesta in May 2019. The Fusion sedan seems to be retiring some time in 2021, but the automaker appears to have reversed course on whether to keep the name in the lineup.

"They were canceling it originally, but then they were like, 'No, we're not canceling it,'" said John Murphy, an analyst for Bank of America Merrill Lynch, who publishes the closely watched "Car Wars" report that predicts future product plans for all major automakers.

A sport wagon similar to the Subaru Outback would thrust Ford into a fast-growing and competitive segment of the market. With U.S. sales up 5.5 per cent this year, the Outback, is Subaru's top-selling model and wins kudos for its practicality, dependability and fuel economy. Sales are down 1.2 per cent in Canada, where it trails the Forester and Crosstrek in sales by volume.

Jim Farley, Ford's president of global markets, hinted that such a vehicle was coming in April when he explained that the company was exiting sedans to offer a "growing variety" of "utility body styles." He said those new models would "give customers the utility benefits without the penalty of fuel economy."

Ford dealers are just happy they won't suffer the penalty of losing the Fusion name.

"There's no doubt that we've built up equity in that name," said Jack Kain, an 89-year-old Ford dealer near Lexington, Ky. "We can't let that go."

 

 

Ontario's been fighting to get
its automotive groove back

July 15, 2018
Stephanie Hernandez McGavin

Long viewed as a close partner of the U.S. auto industry, delivering tooling services, components and finished vehicles in step with factories in the United States, Ontario has struggled over the past decade. Now it is battling back - determined to rekindle local manufacturing.

Canadian economic leaders viewed the situation as dire, since Ontario is the center of the country's automotive sector. Since 2006, 16 new vehicle assembly plants have opened in North America - not one of them in Canada.

Officials now believe they can regain Canada's competitive edge and win new auto investment by partnering with companies on their investments.

"During the global recession, our government made the investments necessary to keep our auto sector strong during that turbulent time," Steven Del Duca, former Minister of Economic Development and Growth, said in an interview prior to a June 7 election, during which he lost his seat. "Ten years later, thanks to these actions, Ontario has a thriving auto sector - but there remain important opportunities that call for continued government support and investment."

The focus now shifts to the Progressive Conservative's majority government led by Doug Ford, who doesn't always believe in using tax money to help spur investment by big corporations.

In May, the Canadian and Ontario governments said they will invest a combined $220 million to support Toyota Motor Corp., which has announced projects there valued at $1.4 billion. Toyota said it will upgrade its two Ontario assembly plants to build the next-generation RAV4, as well as incorporate R&D operations.

Last year, Ford Motor Co. said it will invest $1.2 billion to establish a connected vehicle engineering research centre in Ottawa and upgrade factories across the province. The Canadian and Ontario governments committed a combined $204 million to the projects.

At the beginning of this year, Linamar Corp. also said it will invest $500 million in Ontario. The Canadian government committed $49 million to the project and Ontario said it will provide a conditional grant of up to $50 million. Linamar will use the money to advance next-generation technology for electric and connected vehicles, creating an innovation center dedicated to machine learning and robotics with 1,500 jobs.

While the U.S. auto industry made a furious comeback in the years following the industry crisis of 2008-2009, some remnants of it lingered on in Canada. Canada, and Ontario in particular, lost out on critical automotive investment in 2010 as North American vehicle sales and production began to rebound, industry veteran Ray Tanguay, now an automotive advisor to the government of Canada and Ontario, reported in his 2018 "Drive to Win" report about the outlook for Canada's auto industry.

"In order for Canada to win investments we cannot just be competitive," Tanguay wrote in his report. "We need to be better than other jurisdictions south of the border."

The Linamar investment is a significant one because it represents a solution for an emerging opportunity- the industry's need for more engineering firepower. Linamar operates 20 plants around Guelph, Ontario. Del Duca said the supplier is considered a "true, homegrown success story and a vital pillar of the local economy in the Guelph region."

Linamar CEO Linda Hasenfratz said the decision to make a major investment in Ontario was an important move for the supplier.

"We have very deep capabilities and deep bench strength here in terms of manufacturing and technology," Hasenfratz said. "We absolutely want to take advantage of the fantastic workforce and people we have here to launch business. We're dedicated, and always have been, to manufacturing in Ontario."

 

 

Goodbye Fusion sedan,
hello Fusion sport wagon


Keith Naughton,
Bloomberg News
July 12, 2018

Ford Motor Co. is killing its slow-selling Fusion sedan while keeping the name to affix to a sport wagon it is developing to take on Subaru’s popular Outback, according to people familiar with the automaker’s plans.

The Fusion name probably will live on when the sedan exits early next decade, according to a spokesman. It will be replaced in the showroom by a high-roofed hatchback built on the same mechanical underpinnings, said two people who asked not to be identified revealing future product plans.

Ford shocked the auto industry – and many of its dealers – when it announced plans in April to abandon the shrinking sedan market and go all in on higher-profit sport utility vehicles and pickups. By early next decade, only the Mustang pony car will remain in Ford’s U.S. lineup. Worried that customers will defect to rivals, dealers have pushed to retain the Fusion name, which just four years ago was such a strong seller that Ford had to add a second factory of production.

“They spent hundreds of millions of dollars for brand equity in that Fusion name – not $10 million or $20 million – but hundreds of millions,” said Rhett Ricart, one of Ford’s top dealers, whose showroom is near Columbus, Ohio. “The smart thing is to play on that brand equity.”

Ford spokesman Mike Levine declined to speculate on the new Fusion’s design while confirming “we’ll likely continue to use the name because of its awareness, positive imagery and value with consumers.”

The planned reinvention for the made-in-Mexico Fusion is akin to how Ford is transforming the Focus compact car into a crossover utility vehicle that the automaker will begin making next year in China.

Ford needs to find a way to keep its sedan buyers returning to its showrooms. A trade-in analysis by researcher Kelley Blue Book found that less than half of Ford Fusion owners are loyal to the brand. The most popular SUV models that Fusion owners consider are the Honda CR-V and Toyota RAV4, KBB found.

“Ford has a hard time moving people from their cars to SUVs,” said Michelle Krebs, a senior analyst with KBB affiliate Autotrader.

The automaker has been vague on the Fusion’s future, even as it revealed it was ending production of the Taurus sedan in March 2019 and the subcompact Fiesta in May 2019. The Fusion sedan seems to be retiring some time in 2021, but the automaker appears to have reversed course on whether to keep the name in the lineup.

“They were canceling it originally, but then they were like, No, we’re not canceling it,’” said John Murphy, an analyst for Bank of America Merrill Lynch, who publishes the closely watched “Car Wars” report that predicts future product plans for all major automakers.

A sport wagon similar to the Subaru Outback will thrust Ford into a fast-growing and competitive segment of the market. With sales up 5.5 percent this year, the Outback is Subaru’s top-selling model and wins kudos for its practicality, dependability and fuel economy.

Jim Farley, Ford’s president of global markets, hinted that such a vehicle was coming in April when he explained that the company was exiting sedans to offer a “growing variety” of “utility body styles.” He said those new models would “give customers the utility benefits without the penalty of fuel economy.”

Ford dealers are just happy they won’t suffer the penalty of losing the Fusion name.

“There’s no doubt that we’ve built up equity in that name,” said Jack Kain, a Ford dealer near Lexington, Kentucky. “We can’t let that go.”

 

 

Appeals court approves $10B
Volkswagen emissions deal

The Associated Press
July 11, 2018

San Francisco –A U.S. appeals court on Monday approved a $10 billion settlement between Volkswagen and car owners caught up in the company’s emissions cheating scandal.

The deal delivered “tangible, substantial benefits” and the federal judge who approved it did more than enough to ensure it was fair, a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled unanimously.

The German automaker agreed to spend up to $10 billion compensating owners of roughly 475,000 Volkswagens and Audi vehicles with 2-liter diesel engines – the bulk of the vehicles caught up in the scandal.

Volkswagen acknowledged that the cars were programmed to cheat on emissions tests. Under the terms of the deal, the automaker agreed to either buy back the cars or fix them and to pay each owner thousands of dollars in additional compensation.

U.S. District Judge Charles Breyer in San Francisco approved that deal in 2016 as part of a $15 billion settlement that also included $2.7 billion for unspecified environmental mitigation and an additional $2 billion to promote zero-emissions vehicles.

Volkswagen has acknowledged that more than 550,000 vehicles in the U.S. were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators found that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems.

 

Transit van a quiet
giant in Ford lineup

They're not fast or flashy, but Ford's Transit vans are silent pillars in the carmaker's lineup.

Ian Thibodeau,
July 10, 2018
The Detroit News

It's not sleek, it's not fast and it's not flashy, but Ford's full-size Transit van has been a quiet sales giant, dominating the commercial van market across the world.

And it's that very workhorse character that could make it and the smaller Transit Connect the potential platforms for the automaker's business plan to move people and things with fully self-driving vehicles, experts say.

Ford has declined to comment on what model might carry the brand's autonomous business come 2021, when it says it will bring a robotic vehicle to market. But experts point to the vans' affordable and adaptable nature as logical bases to enter the market.

For now, the Transit and passenger-oriented Transit Connect are generating sales during an off-year when the automaker has few new offerings to compete with flashy new SUVs and crossovers offered by competitors.

The full-size van is popular among commercial buyers for its versatility and easily customized cargo space. Ford hopes the low price point and interior space can help its popularity among other buyers outside the commercial realm — though owning the commercial market has proven lucrative.

"The Transit is really getting the lion's share of that commercial market," said Karl Brauer, executive publisher of Autotrader.com, a marketplace for car shoppers.

The Transit commercial vehicle  generates most of the sales for the segment. Ford says sales were up 7.5 percent through the first six months of the year, driven largely by fleet sales. Sales of the smaller Transit Connect were down 3.8 percent. 

"It's similar to how the F-150 is the best-selling vehicle in the full-size truck market," said Brauer.  "You've got Ford owning these two highly profitable segments."

Brauer, who in 2016 used a full-size commercial Transit to haul car parts from California to Michigan, said Ford has a unique vehicle in that model. It looks and drives like a modern vehicle, he said, not a clunky full-size van. 

Daimler AG, Fiat Chrysler Automobiles NV and General Motors Co. all produce full-size commercial vans. But Ford's global Transit platform dominates when it comes to global volume. The nameplate recognition and market penetration gives Ford an undercurrent of profit that helps carry the automaker as it prepares refreshed Transit and Transit Connect models this year during a slow time for new products.

"It's basically the F-Series, part two," Brauer said. "If you're able to provide for commercial and fleet use when the economy is generally booming, that's a whole new level of profit."

Mark LaNeve, Ford sales chief, said he expects retail sales for both vehicles to grow through the end of the year as the automaker gears up to launch a refreshed van and eliminate sedans from its lineup.

"It's a hell of a great value in the marketplace," LaNeve said. "We're going to do a surprising amount of retail business." 

The success Ford has seen with the Transit in the commercial vehicle market is having a trickle-down effect, according to Stephanie Brinley, analyst with IHS Markit, a London-based analysis company. The success of the commercial vehicle is helping turn consumers' eyes to the Transit Connect, which would in turn build brand recognition and trust as Ford gears up to launch its autonomous vehicles in 2021.

"The Transit Connect is finding a niche home," she said. "Others which have offered similar products have not seen the same success (and) part of Ford’s success with Transit Connect is related to its strong commercial business.

"They have even more potential to support Ford's future autonomous vehicle plans, as the vehicles can be customized for multi-purpose use."

Although Ford officials have declined to comment on what its first-generation autonomous vehicle will look like, or what platform it will use, the company has said it will be able to transition between moving people and moving goods. They have said it will be a hybrid and will be a new nameplate.

That might not mean it's a new architecture, though. GM removed the steering wheel, brake pedal and accelerator from its Bolt electric vehicle, stuffed it with autonomous hardware and software, and renamed it the Cruise AV. 

Ford currently tests its autonomous software on hybrid Fusion sedans, though it uses Transit vehicles for the Chariot shuttle service it's invested in.

For now, Ford hopes the Transit Connect will be piloted increasingly by human drivers. The company is marketing the van toward people like Chris and Tiffany Best. The owners of the Rust Belt Market in Ferndale said their Transit Connect has become a surprising asset as they balance work and family life.

"It's a better value than some of the SUV models for our lifestyle," Tiffany Best said. She and Chris use the vehicle to haul anything from plywood to planters to the market. They also use it as a family-hauler. 

It's easier to get in and out of than an SUV, they said, and the high ceiling allows for more cargo space than most mid-size or small SUVs. 

Another perk: It doesn't look like a soccer-mom van.

"It looks cool," Chris Best said of their gun-metal gray Transit Connect. "It's not like a typical van."

That's something Ford hopes to build on as it eliminates sedans from its lineup, though analysts don't think the Transit Connect will be able to fill in the gap sedans will leave. With the Fusion, Fiesta Taurus and Focus sedans to be axed — along with the C-Max compact — the Connect would become Ford's second-cheapest vehicle, currently retailing at $23,215.

Ford has said the Focus will be redesigned into a crossover dubbed the Focus Active. Other crossovers are expected to enter Ford's lineup in the next few years.

Brinley expects the Transit and Transit Connect to remain silent profit pillars for the Dearborn automaker moving forward.

"I don’t think it’s going to come close to filling a sedan gap," Brinley said. "It’s not sexy, it’s practical. There are more utilities coming from Ford which will do better.

 

Auto tariffs would be
'catastrophic' to Canada
and cost 100,000 jobs,
dealers warn

If Canadian government responds in kind, it could
add $9,000 to sticker price of new car

CBC News

July 9, 2018

The U.S. government threat to put a tariff on all Canadian-made vehicles would be "catastrophic" to Canada's economy, costing 100,000 jobs and adding as much as $9,000 to the sticker price of a new car if Canada responds in kind, dealers say.

Following recently announced levies on steel and aluminum, U.S. President Donald Trump has repeatedly threatened in recent months to impose a similar tariff on Canadian-made vehicles, something the Canadian Automotive Dealers Association warned Friday may be enough to tip the entire economy into recession.

The metal tariffs saw steel face a surcharge of 25 per cent, while aluminum was hit with a 10 per cent hike. The president has suggested a similar plan for cars, one that would see 25 per cent on cars themselves, and 10 per cent on parts.

"This — or anything close to it — would be catastrophic for not only the Canadian automotive industry but for the economy as a whole," CADA's chief economist Michael Hatch said at a news conference Friday in Ottawa.

The group, which represents 3,200 Canadian car and truck dealers, says that more than 100,000 manufacturing jobs would be at immediate risk if tariffs are imposed. "Longer term, indirect job losses at dealerships and elsewhere would drive this number much higher," CADA said.

Other recent reports from banks have had similar conclusions, with Toronto-Dominion Bank recently calculating that the job toll from auto tariffs could be in excess of 160,000.

Hatch's analysis suggests that Ontario would feel the impact more than anyone, as the province is home to the lion's share of all auto and parts manufacturing in Canada.

On the consumer side, CADA estimates that if Canada responds with similar tariffs of their own on U.S. cars — just as they did in retaliation to the metals tariffs — he expects the average price of a car to increase by between $5,000 and $9,000, depending on the make and model. The average new car in Canada currently costs about $40,000, CADA says.

"Impacts on industry on both sides of the border will be significant but in the end it is the American consumer that will pay by far the biggest price if tariffs are imposed," Hatch said. "These figures aren't alarmist, they are the reality that we face."

Car dealerships employ 156,000 Canadians, CADA says, and as many as 30,000 of those jobs could immediately be at risk if any car tariffs come to pass.

"In a trade war, we point the guns at ourselves," Hatch said.

The group urges lawmakers to do anything they can to avoid that scenario, by working to secure a new NAFTA deal. But if the worst should happen, CADA is recommending three steps it wants the federal government to take in order to minimize the damage:

  • Cut sales taxes for new vehicle sales to offset the tariffs.
  • Implement a "cash for clunkers" style program that would encourage owners to trade in their older vehicles.
  • Produce an immediate suite of personal and corporate tax reforms aimed at enhancing Canada's competitiveness.

 

Aging lineup ails Ford in China

Ian Thibodeau,
The Detroit News
July 8, 2018

Ford Motor Co. sales in China slid by 25 percent in the first six months of the year, just as a trade war breaks out between the U.S. and that country.

China said Friday it would retaliate against U.S. tariffs with 25 percent duties of its own on certain products — including automobiles from the United States. In response to that declaration, Ford said Friday it will not raise the prices of its vehicles exported to China for now, according to a Bloomberg report.

The Dearborn automaker said exports to China totaled 7,848 for the first half of the year.

An aging vehicle lineup was the primary culprit that hurt Ford's China sales for the first half of 2018, even as some of its competition flourished.

While Lincoln brand sales have increased 4 percent for Ford in China this year, the automaker has struggled to sell aging the products that it imports there, as well as those it sells with its joint ventures. Peter Fleet, president of Ford's Asia Pacific wing and CEO of Ford China, said the company knew 2018 would be a tough sales year due to its product cycle.

"China is a new product-driven sales market," spokeswoman Lori Arpin said in an email. "As part of our In China, For China strategy, Ford will introduce a wave of exciting new products later this year including the all-new Focus and new Escort. As our volume vehicles, the all-new Focus and new Escort will hit the showroom in a few months."

Arpin said Ford is focused on a long-term strategy, and plans to expand its product portfolio there as part of plan that takes the company through 2025. She said Ford is focused on its plan as the trade war between the U.S. and China erupts. 

Ford reported it sold 62,057 vehicles in China in June, a 38 percent decline compared to the same month a year ago. It's sold 400,443 vehicles there this year.

Meantime, Ford's crosstown rival General Motors Co. reported China sales grew 4.4 percent in the first half of the year, having sold 1.8 million vehicles. The Detroit automaker plans to add 10 new models there in the second half of the year.

GM sold nearly double the number of vehicles in the second quarter in China than Ford has sold there all year.

Buick moved 230,454 units in China in the second quarter; Lincoln has sold 24,314 vehicles there in the first half of the year.

Ford plans to launch four redesigned vehicles in China later this year.

"Looking forward to the second half of the year, we will continue to bring our strategy to life by further strengthening our relationships with our partners and dealers, providing our customers with more choices and nurturing our local team for a bigger, better and brighter future for Ford in China," said Fleet in a statement.

 

U.S. auto tariffs could cut
Canada's output by nearly
1 million cars, CIBC says

Canada produces just over 2 million new
vehicles a year, according to StatsCan

Rajeshni Naidu-Ghelani
CBC New
July 7, 2018

The number of cars made in Canada could fall by almost 900,000 units a year if the U.S. hits this country with a 25 per cent auto tariff, according to a recent report by CIBC.

Royce Mendes, senior economist at CIBC Capital Markets, is the latest analyst to sound the alarm over the impact that Canada's economy could see from the recent tariff threat from U.S. President Donald Trump.

"It wasn't that long ago when it was commonplace to question whether President Trump could make good on his promises. But, so far, he's generally found ways to stay true to his word, and that's exactly what's so concerning about auto tariffs," Mendes said in a note on Wednesday.

Trump and his administration have repeatedly threatened Canada with the possibility of imposing a 25 per cent tariff on cars imported from Canada, along with 10 per cent tariff on auto parts after deciding against exempting Canada from hefty tariffs on steel and aluminum since June.

The Canadian government has responded with tit-for-tat tariffs on those metals from the U.S., along with tariffs on a long list of other goods starting this month, which has intensified the trade war between the two neighbours. 

Mendes estimates that if the U.S. imposed a 25 per cent tariff on cars imported from Canada, then that would result in the country's auto production falling by 900,000 units a year. But, if a U.S. auto tariff was imposed on all imported cars, and not just those from Canada, then production in the country could fall by more than 400,000 cars a year.

Canada produces more than two million new vehicles a year, according to Statistics Canada. That suggests that car production in the country would fall by roughly half if only Canada was targeted with a U.S. auto tariff, according to CIBC.

"After also accounting for a 10 per cent U.S. tariff on [auto] parts, and the fact that reduced Canadian production would require fewer foreign inputs, we estimate the direct drag on GDP [gross domestic product] to be one per cent and 0.5 per cent respectively for each scenario," Mendes said.

"That doesn't take into account a resultant weaker Canadian dollar, which would work to soften the blow, but a hit to confidence could potentially seriously worsen the situation."

Job losses north of border

In terms of how many jobs would be affected by the fall in Canadian auto production, Mendes didn't specify the resulting number of job losses.

He did, however, add that there could be a ripple effect over time as people who lost jobs spend less and cause employment to decline in other industries.

Just last month, however, TD Bank warned that Trump's auto tariffs could cost Canada 160,000 jobs, especially if Canada retaliates.

Mendes said that while it's tempting to suggest that Canada could raise its own tariffs and force Canadians to buy cars made in the country, that is not a "feasible solution."

"Canada only produces a handful of models relative to the hundreds of choices to which consumers have become accustomed to," he said. "Unless you believe someone looking to buy a flashy drop-top convertible sports car would be satisfied leaving their local car dealership with the keys to a minivan, it isn't a feasible solution to the potential problem at hand."

He added that U.S. consumers were somewhat better prepared to deal with an import tariffs on cars, because U.S.-made cars accounted for almost 80 per cent of total cars sold in the country last year. In comparison, only about 10 per cent of cars made in Canada last year were bought by Canadians.

Meanwhile, Douglas Porter, chief economist at BMO Financial Group, said that there's no way one can put that fine a point on what will happen to auto production in Canada on the back of U.S. auto tariffs.

"Companies will ultimately decide whether to keep plants open or not, so production is going to move in big discrete chunks," he said.

Porter did, however, agree with Mendes that the tariffs could send Ontario, the heart of Canada's auto production, into or near a recession.

"Given the range of U.S. import volume changes resulting from the tariff, Canadian auto production could be cut by somewhere in the 600,000 to [the] one million unit range," Porter said. 

"Assuming a similar impact through the parts supply chain, this would directly carve roughly 0.3 to 0.6 percentage points from Canadian GDP, and could put at least 40,000 factory jobs at risk."

 

 

Advocacy group seeks Ford
Explorer recall due to fumes


Tom Krisher,
Associated Press
July 5, 2018

Detroit – A nonprofit auto safety advocacy group is asking Ford to recall 1.35 million Explorer SUVs due to continued complaints of exhaust fumes in the passenger compartments.

The Center for Auto Safety says it found 44 complaints in a government database about fumes and potential carbon monoxide after owners had taken Explorers in for free repairs in a Ford customer service campaign that started last October.

The center made its request in a letter to Ford CEO Jim Hackett this week.

The National Highway Traffic Safety Administration has been investigating the problem for two years in police and civilian Explorers from the 2011 through 2017 model years, but it has not reached a conclusion.

Ford says Explorers are safe, owner complaints have decreased and the free service has addressed the exhaust odors. The company says anyone who isn’t satisfied with the repairs should contact their dealership “for further inspection.”

In the service, Ford said mechanics would check for leaks in the rear lift gate gaskets and drain valves. If any leaks are found, they’ll be sealed or gaskets will be replaced to prevent fumes from entering. They’ll also reprogram the air conditioning to let in more fresh air.

“The continued complaints and corresponding reports of incidents and injuries demonstrate the problem of carbon monoxide exposure inside Ford Explorers has not been resolved,” Jason Levine, the center’s executive director, said in a statement. Based on complaints, Levine said the problem seems to have continued into model year 2018 Explorers “suggesting that the issue apparently has not been designed out of the vehicle.”

Levine said he thinks NHTSA would look into the effectiveness of a recall if 44 owners complained that the remedy did not work.

The center also said Ford and NHTSA should do a recall “before tragedy strikes” from a driver or passenger being overcome by fumes.

Prior to October of last year, Ford had focused on fixing only law enforcement versions of the Explorer. But while maintaining the civilian versions were safe, the company said it decided to do a service campaign for them in response to customer concerns about odors and carbon monoxide.

NHTSA began its investigation of Explorers in July of 2016.

The agency said previously that tiny cracks in the exhaust manifold – a cast iron or stainless steel tube that carries combustion gasses to the exhaust – could explain why fumes are entering the cabin. But Ford has said there is no pathway for exhaust to escape from the manifold into the car.

NHTSA said in a statement Tuesday that it is testing multiple civilian and law enforcement vehicles and doing field inspections of vehicles involved in complaints. The agency also says it’s testing and monitoring the effectiveness of Ford’s customer service repair campaigns.

 

 

FCA's Canadian plants safe if
Chrysler, Dodge die, Unifor says

John Irwin
Automotive News
July 4, 2018

Unifor President Jerry Dias says he is confident Fiat Chrysler’s Canadian assembly plants will survive even though the Chrysler and Dodge brands were left out of the company’s five-year business plan, which spans from 2018 through 2022.

FCA unveiled its five-year plan in Italy in June. The automaker focused most of its attention on Jeep, Ram, Alfa Romeo and Maserati. The absence of Chrysler, Dodge and Fiat led to speculation that those brands could be on the chopping block, though the company maintains that the brands will not be eliminated.

Their omission raised questions about the future of FCA’s Ontario operations. FCA’s Brampton plant builds the Dodge Charger, Dodge Challenger and Chrysler 300, while the Windsor plant assembles the Chrysler Pacifica and Dodge Grand Caravan minivans. The company employs about 9,600 hourly workers at the two facilities, combined.

Dias said FCA has assured him the plants will survive into the future with product commitments, though he did not say whether the company has pledged new products such as a Jeep vehicle to either factory.

He said he has confidence in FCA CEO Sergio Marchionne, a Canadian citizen, wanting to keep those plants open.

“I take him at his word,” Dias said. “I doubt very much that he would want to see the fall of those plants on his watch.”

Both plants have received investments from FCA in recent years. As part of 2016 labour negotiations, the Brampton plant was slated for a $325 million retooling of its paint shop, while the company spent more than $1 billion to retool the Windsor plant for assembly of the next-gener- ation minivan.

Of course, there is still NAFTA renegotiations and U.S. President Donald Trump’s threat of tariffs on vehicles imported from Canada.

FCA is developing contingency plans to adjust its manufacturing footprint should Trump’s hardball trade tactics result in higher auto tariffs or the collapse of existing trade agreements.

However, it’s not clear how Canada fits into those plans.

FCA’s five-year plan includes a new three-row Jeep Grand Cherokee, a midsize Ram pickup, several new or updated Alfa Romeos, a battery-electric Maserati sport coupe and other new products. Marchionne said FCA would spend US$9 billion (C$13.7 billion) on a plan to electrify its lineup.

 

 

Trump tariffs could add
$10K to vehicle price, Global
Automakers of Canada says

July 3, 2018
The Canadian Press

TORONTO — The Trump administration's tariff threats have the potential to drive companies currently operating in Canada out of the country, the president of a Canadian automotive association said Tuesday.

The United States has already imposed tariffs on the steel and aluminum industries and has threatened to impose a 25 per cent levy on Canadian-made autos.

The tariffs could make Canadian-made products uncompetitive and add $6,000, $10,000 or more to the cost of a vehicle, said David Adams, president of Global Automakers of Canada, at an event sponsored by the Economics Club of Canada.

He said a non-automotive company he knows has decided it can't expand in the United States from Ottawa, because of the uncertainty, so it's opening a U.S. office and the same could happen to automotive companies.

"The uncertainty effectively does the job of…driving more investment into the United States as the safe harbour," Adams said.

The Trump administration hasn't necessarily realized that the its tariffs will also hurt the United States, said MaryScott (Scotty) Greenwood, chief executive of the Canadian American Business Council — pointing to a recent announcement by Harley-Davidson.

A tariff war between the U.S. and many of its trade partners has already prompted the iconic American motorcycle company to move production of motorcycles bound for Europe overseas, blaming European Union tariffs it said would add an estimated $2,200 cost to the average bike. That prompted President Donald Trump — whose own tariffs prompted the EU moves — to accuse Harley of using tariffs as an excuse for moves already planned.

"It's a very dangerous game we're playing here, economically," Greenwood said.

Prime Minister Justin Trudeau has announced Canada will impose $16.6 billion in retaliatory tariffs on U.S. products coming into Canada, which went into effect on Sunday.

But CIBC chief economist Avery Shenfeld said Tuesday the United States is far better equipped than Canada to withstand the use of tariffs as a "sledge hammer" in trade negotiations.

Some Americans will face higher costs on imported goods from Canada but U.S. producers will be at a smaller risk because their home market is so much bigger than ours, Shenfeld said during a panel discussion about NAFTA in Toronto.

"If you are doubting whether or not you can produce that widget for (a car) in Canada and avoid a 25 per cent tariff when you sell that part to the American plant, you're . . . going to want and see what happens," he said.

"Canada and Mexico can't afford to have this cloud of uncertainty, to a much greater extent than the U.S. can."

 

 

Province Announces Changes
to Prescription Drug
Coverage in Ontario

Kelly Roche
July 2, 2018

Prescription drug coverage is changing -under the new OHIP+ program- less than 24 hours after Ontario Premier Doug Ford unveiled his “all-star” cabinet at Queen’s Park.

Minister of Health and Long-Term Care Christine Elliott says it’s “more efficient, saving the taxpayers money and dedicating resources to the people who need it most.”

The OHIP+ program -which provided free meds for Ontario residents 24 and under- is now covering only those who don’t have existing prescription drug benefits.

Kathleen Wynne’s Liberal government rolled out pharmacare on Jan. 1, 2018 — with a $465 million price tag.

But now it’s being revised and “children and youth who are not covered by private benefits would continue to receive their eligible prescriptions for free,” said Elliott.

This means those who are covered by private plans would bill those plans first, with the government covering all remaining eligible costs of prescriptions.

“Since insurance plans can cover thousands more drugs than the 4,400 currently available through OHIP+, children and youth would have access to more medications than under the current program,” said Elliott.

Private insurers have previously given the government a grace period for some medications, which is set to expire on July 1.

“We are asking those insurance groups to extend this grace period as we make these changes,” Elliott said.

“We look forward to working with insurance groups to ensure a smooth transition to this updated system.”

The Liberals also extended pharmacare coverage to seniors, making prescription drugs free for Ontario residents ages 65 and over starting August 1, 2019.

Commonly prescribed drugs for cholesterol, hypertension, thyroid conditions, diabetes, and asthma were to be covered.

It’s unclear where it stands.

Ontario is the first province to provide prescription medication coverage at no cost for children and youth age 24 and under.

 

Automakers push back against
Trump auto tariff plans

Half of imported vehicles come
free-trade partners Canada, Mexico

Automotive News
July 1, 2018
Eric Kulisch

WASHINGTON -- The trade association representing international automakers operating in the United States said Wednesday that imposing tariffs on imports of vehicles and parts for national security reasons would harm the auto industry by raising prices, lowering demand and inviting retaliation from trading partners.

The group predicted significant job losses in the United States.

President Donald Trump has long complained about the U.S. trade deficit in automobiles, especially criticizing Germany and the European Union, and instructed his administration to investigate whether any action is needed to correct the imbalance. He has floated the possibility of a 25 per cent import tax.

“America does not go to war in a Ford Fiesta,” Association of Global Automakers President John Bozzella said in a conference call with reporters. “There is no national security justification for taxing imports of vehicles and parts or discriminating between global companies headquartered here or in allied countries. Every U.S. production facility in the industry could be made available in a national emergency, and the 130,000 Americans who work directly for international automakers are no less patriotic or willing to serve their country in a time of crisis than any other American.”

“If this investigation leads to tariffs, retaliation against U.S. exports is inevitable,” Bozzella added. Substantial tariffs against major US auto exports have in fact already been announced, placing American auto workers on the front lines of this trade conflict.”

The Trump administration is investigating whether auto imports are a national security threat under authority in the Trade Expansion Act of 1962 that has only been invoked on two occasions -- only one of which resulted in any trade action before the Trump administration.

Most trade experts and economists say using national security as a pretext for protectionism opens the door for other countries to circumvent World Trade Organization rules and claim sovereign rights to impose tariffs based on defence needs.

Bozzella noted that the U.S. auto industry is thriving, with near record levels of production, sales and exports, and isn’t seeking government help against imports.  

The Association of Global Automakers noted in the filing that all 14 automakers producing vehicles in America -- including homegrown Ford Motor Co., General Motors and Fiat Chrysler Automobiles -- import vehicles, accounting for 44 per cent of U.S. sales. Of these, half are imported from free-trade partners Canada and Mexico, and those vehicles incorporate significant U.S. content.

The Alliance of Automobile Manufacturers, whose members include many that belong to the Association of Global Automakers as well as the Detroit Three, also filed comments warning that 25 per cent tariffs would add about US$5,800 to the price of a vehicle and collectively cost consumers US$45 billion per year.

The alliance usually focuses on safety and environmental issues related to autos, leaving trade issues to the Automotive Policy Council, representing companies with domestic headquarters, or the Association of Global Automakers. Its involvement suggests that the domestic and international automakers are on the same page, given that the tariffs would also apply to equally to Buick's imports from China and BMW's from Germany, and because all manufacturers import parts for vehicles assembled in the United States.

 

 

 

 

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