Auto execs decry financial losses due to tariffs
- Fiat Chrysler, Ford, GM, Toyota and others are facing financials losses because tariffs have raised costs of steel and aluminum, Reuters reports, from the Detroit Auto Show.
- Ford has forecast weaker-than-expected fourth-quarter profit levels, indicating that global tariffs could erode 2019 earnings by about $700 million, according to Reuters. A Toyota executive said the company raised prices three times because of higher tariff costs.
- In addition to the pain of tariffs, the government shutdown is delaying certification for one of Fiat Chrysler's new heavy-duty pickup truck models.
The uncertainty surrounding trade negotiations is weighing heavily on automakers. "Certainty is something we really desire because of our product lead times," Ford Executive Chairman Bill Ford Jr. told Reuters. "We don’t have that right now."
The trickle-down effect of the tariffs and shutdown is already being felt. The Council on Foreign Relations predicted 40,000 automotive jobs could be lost because of the 25% steel tariff. GM alone announced plans to cut 15,000 jobs.
A study by the Center for Automotive Research (CAR) predicts new car prices could rise an average of $4,400, with even U.S.-built vehicles increasing $2,270 because they still use imported parts and materials. The numbers it cites definitely give automakers — and consumers — cause for concern. For example, CAR, predicts a 25% tariff on automotive and parts imports (such as steel) will cost 714,700 U.S. jobs and a $59.2 billion lower U.S. economic output. Auto dealerships, it said, could lose as many as 117,500 jobs and $66.5 billion in revenue.
"Tariffs and quotas on automobiles and automotive parts will not strengthen the U.S. economy or make U.S. automakers and suppliers more competitive in the global market," Carla Bailo, CAR’s CEO and president, said in a press release announcing the study, which was commissioned by the National Automobile Dealers Association (NADA).
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