Latest news with #automobiles


CBC
4 days ago
- Automotive
- CBC
The U.S. has a new incentive for the purchase of U.S.-assembled vehicles; should Canadians be concerned?
Social Sharing New tax incentives that encourage Americans to buy American-assembled automobiles would probably be a significant cause for concern any other year and should probably be a cause for concern now, according to one expert. "But the reality is there are other, bigger, more problematic fish to fry than that right now," Greg Mordue said. The professor in the faculty of engineering at McMaster University said the federal tax deduction for interest paid on some vehicle loans is "probably not the most devastating thing that has happened to the Canadian automotive industry." But "that's all relative in the context of 2025," Mordue said. He called the initiative "one more thing." The new incentive was contained in U.S. President Donald Trump's so-called "big beautiful bill," which became law on July 4. It allows some taxpayers to deduct up to $10,000 US of interest payments annually on loans for new American-made light-duty vehicles from 2025 through 2028. Tax incentive follows tariffs targetting Canadian auto sector It only applies to vehicles purchased for personal use, not fleet vehicles or commercial vehicles, and the deduction phases out for individuals with incomes between $100,000 and $150,000 or joint taxpayers with incomes between $200,000 and $250,000. Its introduction follows Trump's decision to levy 25 per cent tariffs on Canadian-assembled automobiles and auto parts that are not compliant with the Canada U.S. Mexico free trade agreement (CUSMA). Industry executives have lobbied against the tariffs arguing they will drive up vehicle prices for consumers. But, Trump pledged while campaigning last year to make interest on car loans tax-deductible, saying it would make car ownership more affordable and "stimulate massive domestic auto production." At a 9.3 per cent interest rate, an average new vehicle buyer could save about $2,200 on taxes over four years, according to Jonathan Smoke, chief economist at Cox Automotive. Asked about the impact of the provision, Mordue said, "it has an effect around the margins … and all I can say is it's not positive, but frankly, there's a lot more devastating things happening to the Canadian automotive industry right now than that aspect." U.S. automobile dealers sold 15.9 million new light vehicles last year, a little over half of which were assembled in the U.S, according to Cox Automotive. It says around 60 per cent of retail sales are financed with loans. An estimated 3.5 million new vehicle loans could be eligible for the tax break this year, if purchasing patterns stay the same, Smoke said. The tax break applies to vehicles assembled in the U.S., no matter where the company making them is headquartered. Different levels of U.S. assembly All Tesla vehicles sold in the U.S. are assembled in the U.S. So are all Acura brands, the luxury model of Japanese automaker Honda. Last year, 78 per cent of Ford vehicles sold in the U.S. were assembled in the country, according to Cox Automotive. General Motors assembles all of its Cadillacs in the U.S. But just 44 per cent of its Chevrolets sold last year were assembled in the U.S., and just 14 per cent of Buicks, according to Cox Automotive. That's a lower U.S-assembled rate than Honda (60 per cent), Toyota (52 per cent) and Nissan (48 per cent), which all are headquartered in Japan. The jury is out on whether the tax break will boost vehicle sales in the U.S. At Bowen Scarff Ford in Kent, Wash., customers started asking about the auto loan tax deduction before Congress had even taken a final vote on the tax-cut bill, said general manager Paul Ray. "I think it's going to help incentivize vehicle purchases through this year," Ray said. Celia Winslow, president and CEO of the American Financial Services Association, concurred. "For some people deciding — 'Should I buy it; should I not?' — this could be something that tips the scale," she said. Others remain sceptical. According to Smoke's math, the average annual tax savings is smaller than a single month's loan payment for a new vehicle. "I don't think it moves the needle on somebody on the fence of buying a new vehicle or not," Smoke said "But I think it could influence their decision to finance that vehicle instead of paying cash or instead of leasing a vehicle."


Zawya
6 days ago
- Automotive
- Zawya
Despite tariffs, it's still America first for Asia's legacy automakers
SEOUL/TOKYO - Toyota and Hyundai Motor may have a beef with U.S. protectionism, but they have one thing in common with President Donald Trump: when it comes to global car markets, it's America first for Asia's legacy automakers. Trump's tariffs on imported automobiles have upended the outlook for the global industry, yet the U.S. remains by far the most important market for Japan's Toyota, South Korea's Hyundai and Asian rivals including Honda and Nissan. North America accounts for at least 40% of the revenue at both Toyota and Hyundai, filings show. The market's importance is unlikely to change any time soon, industry insiders and analysts said, especially with China, now the world's biggest auto market, dominated by homegrown electric vehicle makers such as BYD. Those Asian legacy carmakers with more robust margins and a strong hybrid lineup - such as Toyota, Hyundai, Kia Corp and to a lesser extent Honda - are more likely able to weather the U.S. tariffs storm, and potentially take market share from weaker players like Nissan, analysts said. "The environment that we're in now is becoming increasingly harsh and uncertain, starting with U.S. tariffs," Mazda executive officer Noriyuki Takimura told reporters at an event in Tokyo last week. Mazda aims to strike a balance between "defensive" measures like cost-cuts and "offensive" ones like strengthening its product lineup, he said. Two Hyundai insiders and two Japanese auto executives separately told Reuters they had no intention of downsizing their U.S. businesses in response to tariffs, even as they acknowledged the difficulties ahead. All four spoke on condition of anonymity. The U.S. is Toyota's biggest market in terms of vehicles. It sold 2.3 million vehicles there in 2024, including its Lexus brand, accounting for more than a fifth of its global total. As a source of revenue, North America was second only to Japan in the last financial year. Hyundai's North American revenue was the highest in almost a decade last year. Kim Chang-ho, an analyst at Korea Investment & Securities, estimated it generates around 60% of its profits from the U.S., thanks to higher vehicle prices. Mocked in the U.S. in the 1980s for its perceived shoddy quality, Hyundai doubled down there around a decade ago, especially after tensions between Beijing and Seoul and the rise of domestic EV makers saw it start to lose ground in China. "After years of putting in effort, our brand is finally gaining recognition in the United States," one of the Hyundai insiders said. "So we will not take our hands off the U.S." 'GAME OF CHICKEN' The U.S. has seen a surge in demand for hybrids as consumers have become more concerned about the battery range, price and charging hassles of EVs. Fuel-efficient models such as hybrids will be a key driver to gaining market share, said Morningstar analyst Vincent Sun. Toyota, Hyundai and Kia have particularly strong hybrid offerings. So far, most legacy Asian automakers have avoided raising prices in the U.S. and stronger players are likely to continue to hold off doing so, despite lower profitability, analysts said. Instead, the focus will likely be on taking market share from lower-margin rivals like Nissan and Stellantis, analysts said. 'It will shape up like a game of chicken," said Kim Sung-rae, an analyst at Hanwha Investment & Securities. "Those who will hold up well will emerge as winners.' Over time, tariffs could be a catalyst to help drive consolidation in the industry, or at least deepen existing tie-ups. Investors wonder if tariffs could push Nissan to revive merger talks with Honda that fell apart this year. Mazda, which is 5.1% owned by Toyota, and Subaru, which is 21% owned by Toyota, could become more reliant on the bigger company. MORE INVESTMENT? While Hyundai and Kia have three U.S. factories, they still import about two-thirds of the vehicles sold there. Toyota manufactured 1.3 million vehicles in the U.S. last year, equal to 54% of the vehicles it sold there. Japanese automakers have invested more than $66 billion in U.S. manufacturing since the 1980s, building some two dozen plants, according to the JAMA auto lobby group. At a White House event attended by Trump in March, Hyundai announced a $21 billion investment plan, including a new steel factory, and a plan to boost U.S. production capacity to 1.2 million vehicles a year. The tariffs are likely to encourage Japanese and South Korean automakers to invest more into expanding production capacity and localising supply chains to protect their positions, said Justinas Liuima of research firm Euromonitor International. They will also continue to benefit from one aspect of U.S. protectionism: higher tariffs on Chinese EVs, which means they don't face the same Chinese competition in the U.S. that they do in emerging Asian markets, Liuima said. China ships very few cars to the United States, which imposed a 100% tariff on imported Chinese EVs under the previous administration of President Joe Biden. One of the Japanese executives said it wasn't a matter of simply boosting U.S. production, as high costs, especially of labour, would also weigh on profitability. "It is really a game-changer," Julie Boote, analyst at Pelham Smithers Associates in London, said about the potential longer-term tariff impact. Some automakers have held off giving guidance that takes into account tariffs for the full year, meaning investors may be in store for a rude awakening as companies adjust forecasts as they report quarterly earnings, she said. "There's lots of talk that it's already priced in. I don't really think it is."


Bloomberg
7 days ago
- Automotive
- Bloomberg
Lucid's CEO Warns of Price Hikes Even for American-Made Cars
The head of Lucid Group Inc. warned that President Donald Trump's tariffs will drive up costs to build automobiles — even in the US. The industry's global supply chain means domestic manufacturers still have to import raw materials and some parts from other countries, interim Chief Executive Officer Marc Winterhoff said in an interview with Bloomberg Television on Monday.


Reuters
14-07-2025
- Automotive
- Reuters
European shares fall on Trump's new tariff threats on EU and Mexico
July 14 (Reuters) - European shares fell on Monday, led by automobiles, as the U.S. President Donald Trump's latest threat to impose steep tariffs on the European Union and Mexico kept investors on edge. The pan-European STOXX 600 index (.STOXX), opens new tab was down 0.6% at 544.3 points, as of 0706 GMT. Other regional indexes also declined, barring the UK's FTSE 100 (.FTSE), opens new tab, which was up 0.2%. Trump on Saturday threatened to impose a 30% tariff on imports from the EU and Mexico starting August 1, after weeks of negotiations with major U.S. trading partners failed to reach comprehensive trade deals. In response, the EU said on Sunday it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement. Adding to the trade turmoil, on Monday, Italy's Foreign Minister Antonio Tajani said in a newspaper interview that the EU has already prepared a list of tariffs worth 21 billion euros ($24.5 billion) on U.S. goods if the two countries fail to reach a deal. In the market, European automobile shares (.SXAP), opens new tab fell 1.4%, while retail sector (.SXRP), opens new tab was down 1%. Among individual stocks, AstraZeneca (AZN.L), opens new tab rose 1.9% after the drugmaker said its drug Baxdrostat met all the main and secondary goals of a late-stage study in patients with uncontrolled or treatment-resistant hypertension.
Yahoo
14-07-2025
- Automotive
- Yahoo
European shares fall on Trump's new tariff threats on EU and Mexico
(Reuters) -European shares fell on Monday, led by automobiles, as the U.S. President Donald Trump's latest threat to impose steep tariffs on the European Union and Mexico kept investors on edge. The pan-European STOXX 600 index was down 0.6% at 544.3 points, as of 0706 GMT. Other regional indexes also declined, barring the UK's FTSE 100, which was up 0.2%. Trump on Saturday threatened to impose a 30% tariff on imports from the EU and Mexico starting August 1, after weeks of negotiations with major U.S. trading partners failed to reach comprehensive trade deals. In response, the EU said on Sunday it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement. Adding to the trade turmoil, on Monday, Italy's Foreign Minister Antonio Tajani said in a newspaper interview that the EU has already prepared a list of tariffs worth 21 billion euros ($24.5 billion) on U.S. goods if the two countries fail to reach a deal. In the market, European automobile shares fell 1.4%, while retail sector was down 1%. Among individual stocks, AstraZeneca rose 1.9% after the drugmaker said its drug Baxdrostat met all the main and secondary goals of a late-stage study in patients with uncontrolled or treatment-resistant hypertension. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data