How USMCA will affect future cars

A new deal under NAFTA, more battles around fuel economy regulations, a jailed CEO with the chance to win a big paycheck and a sedan that continues to die. All this and more in The Morning Shift Monday, October 1, 2018.

1st report: new NAFTA, new rules

The North American Free Trade Agreement is about to no longer be a thing, no more than its old rules on cars. The United States, Canada and Mexico finally agreed on a "United States-Mexico-Canada Agreement". In addition to its creative and convincing name, new rules govern the manufacture of cars.

The Washington Post reports that most of the key elements of the new agreement, "USMCA", will not begin until 2020 because of all the signatures and approvals needed by leaders and legislators. This includes the new rules on cars, and given the amount of vehicles produced in the three countries, it's a very big deal.

But when these rules on cars come into effect, there will be important changes on how to avoid tariffs on vehicle production. Here is a brief summary of The Washington Post:

Starting in 2020, to qualify for the zero rate, a car or truck must have 75% of its components manufactured in Canada, Mexico or the United States, which is a substantial increase over the requirement current level of 62.5%.

There is also a new rule that a significant percentage of the work done on the car must be done by workers earning at least $ 16 an hour, about three times what a typical Mexican car worker earns. Starting in 2020, cars and trucks should have at least 30% of the work on the vehicle done by a worker earning $ 16 an hour. This gradually increases to 40% for cars by 2023.

[…] Trump's steel tariffs remain in place (for now). Canada wanted Trump to cut its 25% tariffs on Canadian steel. This has not happened yet. The two countries are still discussing the lifting of these tariffs, but a senior White House official said Sunday that the process was "completely separate".

Improved labor and environmental rights. The USMCA is making a number of important improvements to environmental and labor regulations, particularly with respect to Mexico. For example, the USMCA states that Mexican trucks crossing the US border must comply with stricter security rules and that Mexican workers must have more capacity to organize and form unions. Some of these provisions may be difficult to enforce, but the Trump administration says it is determined to guarantee them – a reason why American unions and some Democrats applaud the new rules.

Also, on this name:

New name: Goodbye NAFTA. The new agreement will be known as the United States-Mexico-Canada or USMCA agreement. Trump, who had long disdained NAFTA, had suggested calling it the "USMC," in the honor of the US Navy Corps, but the USMCA eventually prevailed.

The Post reports that many economists believe that the new rules will help some North American workers, but that this deal may also lead to the production of some cars. There are good changes here, including for Mexican workers, whose wages have always been drastically lower than those of their American and Canadian counterparts and who are often growing as their auto industry grows and grows.

The possible disadvantage is that automakers do not manufacture as many cars in North America, especially small cars, because of the costs, rather than to China.

Anyway! We will see how it works.

2nd Gear: California does not back down on this issue

The Trump administration said last week that it thought there would be a seven-degree temperature rise by 2100, but it continues to push back the Obama-era fuel economy standards to make the cars a little less environment. Who cares if we are already convicted, right?

California still does not have that mentality.

California and the Trump administration are at war against emission standards because the idea of ​​a Trump administration has been a good thing and no one is giving up yet. CNBC reports that on Friday, California regulators voted to enforce Obama era regulations for new vehicles sold in the state, regardless of what the current administration does.

The Obama administration has established a rule for a national average of over 54 mpg by 2025. The Trump administration wants to freeze these regulations to 2020 levels until 2026. California wants that everyone leaves him alone and lets him set his own higher standards. From CNBC:

Under a waiver granted by the US Environmental Protection Agency, California has long been allowed to establish its own stricter vehicle emission rules to combat smog in Los Angeles and California. other urban areas. The Trump administration has proposed to revoke this authority, which could cast doubt on the state's ability to circumvent federal standards.

In a statement, CARB President Mary Nichols said the state would continue to work to maintain a single national program, but the vote ensured that California and 12 other states would not be finalized.

Car manufacturers have asked California and the administration to reach an agreement rather than face years of uncertainty.

Looks like they will agree to disagree on this one, the automakers.

3rd Gear: Make the Jackpot in Prison

The CEO of Audi, Rupert Stadler, is in prison because of all these pesky "emissions", discovered for the first time in the camp of the Volkswagen group. The arrest of Stadler was precisely due to "concerns about the possible falsification of evidence", but being imprisoned will not prevent him from getting money.

After Volkswagen's board of directors discussed Stadler's future as CEO just weeks ago, Automotive News Europe said it could earn millions of dollars if it resigns with years still to his contract. The supervisory boards of Audi and parent company Volkswagen are expected to reach an agreement with Stadler on Tuesday, which could potentially earn millions of dollars and receive severance pay, a source told Automotive News Europe.

From the story:

"There are still things to negotiate," said a person familiar with the board's thinking. "But if I were him, I would deposit the money on an escrow account. The cost of his legal defense will not be cheap, and if the charges prove correct, it is likely that Volkswagen will decide whether to bring an action for damages. " […]

The VW Group Board of Directors on Friday postponed its decision on the future of Stadler. Sales Manager Bram Schot remains Stadler's interim replacement as CEO of Audi.

Both VW and Audi have stated that Stadler was presumed innocent unless proven otherwise, but it is unlikely that he will resume his duties even if he erases his name as he is now considered a well damaged property. .

Why Audi and Volkswagen do not dismiss Stadler, you wonder? According to Automotive News Europe, the two companies can not in principle do so until the allegations are proven, because Stadler could sue for wrongful dismissal.

4th speed: Aston Martin thinks its DBX crossover will become its bestseller

Did you know that people love crossovers? Maybe it was the fact that sedans and small cars were dying faster than you could cry them properly, or the fact that you could not know more about how quickly these ballooned passenger vehicles took off. dealer lands. Anyway, it's not hard to say.

People love intersections so much, in fact, that Aston Martin thinks that its new DBX crossover (which debuted in 2015) will become the company's best-selling vehicle after its launch next year. The DBX looks more like one of those weird crossover-sedan things, but, you know, the details.

The recent story of Automotive News on this subject:

The ultraluxury UK brand expects sales of DBX to reach 3,850 a year, up from around 3,250 for the recently launched Vantage entry-level sports car.

The predictions were made in the Aston Martin Lagonda prospectus, in which it outlined the company's plans to potential investors before the brand's IPO this week in the London market.

Aston also said it expects the DBX to be powered by the same 4.0-liter V-8 bi-turbo engine as the Vantage and the DB11 coupe, rather than a V-12. The AMG engine is supplied by Daimler and produces 496 hp in the DB11. The V-12 is provided by Ford under an expiring agreement in 2021, calling into question its future use.

Aston said the DBX will help it reach new customers, including women.

Crosses! Women! L & # 39; s future!

5th gear: Nissan and others will be able to use the sedan to their advantage

The sedan, currently, is endangered. But if gas prices soar and people have to use their crossover and SUV because of this, Bloomberg says some companies may be better prepared than others.

Not only are foreign automakers selling the largest number of sedans since most US companies have almost given up, but foreign automakers – including Nissan, Honda and Toyota – are also better prepared than US automakers to switch from crossover production. to the production of sedans. are.

From Bloomberg:

That's because their flexible plants can move more easily from one car to another – and maybe again if rising oil prices trigger a revival of the sedan, he said.

The new Altima, for example, shares mechanical foundations with the Leaf electric sedan, the Murano crossover and the Pathfinder SUV. And even though, last month, Ford sold the largest number of F Series vans since August since 2005, Baum said the Detroit car was a self-inflicted strategic weakness.

"The Nissan Altima, Honda Accord and Toyota Camry were not always big sellers," Baum said. "They have become big sellers while Detroit is away from cars."

Long live sedans, even if they are only an alternative when gasoline is too high.

Reverse: the unveiling of the T model

Ford History Company unveiled the first production T-Series model on October 1, 1908, according to History. Celebrate tweeting about the fact that the magic date has been put on the calendar and it's essentially Halloween, as everyone will.

Neutral: Would you buy an Aston Crossover?

If you drown in your own money without knowing what to do with it, would you succumb to Aston Martin's practical vehicle life?