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Japanese automakers welcome North American trade deal, fear what's next

TOKYO — Toyota, Nissan and Mazda welcomed on Tuesday the revised North America trade deal that left Japanese automakers unscathed, but they may face a bumpy ride when Washington and Tokyo hold new talks on over $40 billion of annual U.S. auto imports from Japan. The United States and Canada reached an agreement on Sunday to update the 1994 North American Free Trade Agreement after Washington had forged a separate trade deal with Mexico in August. The updated deal effectively maintains the auto industry's current footprint in North America, and spares Canada and Mexico from the prospect of U.S. national security tariffs on their vehicles. Mazda, which ships cars to the United States from Mexico and Japan, called the deal a "big step forward". Nissan, which makes the cars it sells in the United States locally as well as in Mexico, Japan and other countries, said it was "encouraged" by the agreement. Toyota, Japan's biggest automaker, said it was "pleased" that a basic deal was reached. Other automakers were not immediately available for comment. While the deal has removed the risk that the disintegration of the pact would have posed to automakers, bigger risks loom large for Japanese firms as a chunk of the roughly 7 million cars they sold in the U.S. last year were shipped from Japan, and a trade deal between Washington and Tokyo has yet to be agreed. The United States and Japan last week agreed to begin fresh trade talks, with U.S. President Donald Trump seeking to address Japan's $69 billion trade surplus, of which nearly two-thirds comes from auto exports. Washington is also investigating the possibility of slapping 25 percent tariffs on auto imports on national security grounds, although it has agreed with Japan to put any new tariffs on hold during the talks. Analysts say the United States may take a tougher stance on auto imports from Japan than from its neighbors. "If Japan requests an exemption from the 25 percent tariffs under consideration, Washington could propose a more strict cap on imports than it agreed to with Mexico and Canada," said Koji Endo, senior analyst at SBI Securities. "That would be a risk." This could be a big blow to Japan, as the United States is a key source of revenue for Japanese automakers including Toyota, Nissan and Honda. The U.S. market accounts for a quarter or more of their annual global vehicle sales, and of their total U.S.

Weekly Recap: Toyota, Mazda team up to 'make cars better'

Toyota and Mazda are teaming for a noble purpose: to "make cars better." That's how the two Japanese automakers termed their partnership, which was announced this week. So what does this actually mean? The companies said they will set up a joint committee to look for areas of cooperation and named safety and the environment as issues they plan to tackle. From a product perspective, it's believed that Toyota is interested in Mazda's Skyactive engine portfolio. In turn, Mazda has its eye on Toyota's fuel-cell and plug-in hybrid technology. While more specifics were not confirmed, the companies said the "agreement will go beyond the traditional framework of cooperation," and it has the potential to be a long-range partnership. "The main purpose of this initiative is to enhance the appeal of our cars," Toyota president Akio Toyoda said at the announcement. Previously, Mazda has licensed Toyota's hybrid tech and assembled compact cars for Toyota in Mexico. Akio Toyoda said these projects "triggered" the automakers to explore further collaboration. Dave Sullivan, product analysis manager for AutoPacific, said the tie-up echoes Daimler's wide-ranging work with the Renault-Nissan alliance. "This could be a well-groomed match due to each having very unique skill sets," he said. OTHER NEWS & NOTES Volvo selects South Carolina for US factory Volvo confirmed this week that it will build its first US factory in South Carolina, with construction set to begin this fall. The company first revealed plans in March, though it didn't announce a site. The plant will have initial annual production of 100,000 units, though the vehicle or vehicles to be assembled were not specified. The factory, located near Charleston, will open in 2018 and ultimately employ 4,000 people. The facility will help Volvo continue its growth strategy, which includes strengthening its presence in the US market, where it wants to sell more than 100,000 cars per year. "Building a plant in the US is a reflection of Volvo Cars' commitment to the US and the key role the US plays in our growth objectives," Lex Kerssemakers, senior vice president, Americas, said in a statement. Ford GT spied on the road The 2017 Ford GT was spotted testing around the Blue Oval's headquarters in Dearborn, MI, this week. The raw body panels were exposed, and they lacked paint or camouflage. It's the first time the GT has been captured on the street after a spring of auto show reveals.

Sorry, rotary fans, Mazda's RX Vision probably won't happen

Mazda is doing a lot of things the right way in this age of beige-ness. It just crammed a turbocharged inline-four into the improved CX-9, a bold move unto itself, and one that should also be heartening for Mazdaspeed fans. Wouldn't that engine make for a swell Mazdaspeed3 or Mazdaspeed6? There's a reasonable ray of hope there, but not necessarily a guarantee. The RX Vision, though, is a pipe dream. Mazda is smart to keep the rotary dream alive. It's smart to keep developing it in back rooms and to keep the idea on the public's mind. Credit where credit's due: Mazda has solved some of the stickiest issues the rotary engine has, through savvy engineering and perseverance. We've seen promising patent filings for the Skyactiv-R engine, which is supposed to be found in the RX Vision concept. Mazda uses every opportunity to remind us that development is continuing and that the company would love to bring a rotary-powered sportscar to production. I believe it. But the RX Vision is just a design study. And there are some harsh realities about rotary engine emissions and fuel economy standards that are difficult for modern piston engines to achieve without expensive componentry. Emissions and fuel economy are both bugbears of the rotary, in case you've forgotten. And that explains Mazda's interest in running rotaries on hydrogen, but down that road lie infrastructure challenges as daunting as making a gasoline-powered rotary burn as clean as one of Mazda's Skyactiv piston engines. All this is meant to put Mazda's recent comments to Top Gear in context. Mazda's design director, Kevin Rice, spoke to TG at the Concorso d'Eleganza Villa D'Este, and was waving Mazda's rotary flag quite enthusiastically. "In the back rooms at Mazda, we're still developing it," Rice said, "and when the world's ready to buy another rotary, we'll be ready to provide it." I'd like that to be a comforting statement, but given the realities of fuel economy and emissions regulations and Mazda's position in the market, it seems like a hollow platitude. "When the world's ready" is just another way of saying "when we solve the fundamental issues with this engine layout, and there's an unambiguous market study that shows we can build these cars and make a profit, we'll consider it." That seems like a lot of "ifs". Perhaps Mazda does have a clean-burning, efficient, cheap-to-produce rotary running on an engine dyno in Hiroshima, and it's prepping an RX-9 for the next auto show.