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Trump wants a trade deal, but South Korea doesn't want US cars

SEOUL - US auto imports from the likes of General Motors and Ford must become more chic, affordable or fuel-efficient to reap the rewards of President Donald Trump's attempts to renegotiate a trade deal with key ally South Korea, officials and industry experts in Seoul say. Meeting South Korean President Moon Jae-in last week in Washington, Trump said the United States would do more to address trade imbalances with South Korea and create "a fair shake" to sell more cars there, the world's 11th largest auto market. "What we really want to say to the United States is: Make good cars, make cars that Korean consumers like." While imports from automakers including Ford, Chrysler and GM more than doubled last year largely thanks to free trade deal which took effect in 2012, sales account for just 1 percent of a market dominated by more affordable models from local giants Hyundai and affiliate Kia. Imports make up just 15 percent of the overall Korean auto market, and are mainly more luxurious models from German automakers BMW and Daimler AG's Mercedes-Benz, which also benefit from a trade deal with the European Union. "Addressing non-tariff barriers would not fundamentally raise the competitiveness of US cars," a senior Korean government official told Reuters, declining to be identified because of the sensitivity of the subject. "What we really want to say to the United States is: Make good cars, make cars that Korean consumers like." TASTE BARRIER In Korea, US imports are seen as lagging German brands in brand image, sophistication and fuel economy, industry experts say. US imports do have a competitive advantage in electric cars: Tesla Motors' electric vehicles are seen as both environmentally friendly and trendy, while GM has launched a long-range Bolt EV. US Commerce Secretary Wilbur Ross had cited a quota in the current trade deal as an obstacle to boosting imports. The quota allows US automakers to bring in each year 25,000 vehicles that meet US, not necessarily Korean, safety standards. Should GM, for example, decide to bring in more than its quota of one model - the Impala sedans - it would cost up to $75 million to modify the cars to meet Korean safety standards, the company told its local labor union. Asked about non-tariff barriers, a spokesman at GM's Korean unit said removing them could expand the range of models the company can bring in from the United States. No US company, however, has yet to make full use of the quota, industry data shows.

Second-tier UAW workers promoted for first time after Ford hits quota

The United Auto Workers put out a statement on Friday that 55 Ford workers chosen by seniority would be moved from the Tier 2, entry-level pay rate of around $19 per hour to the Tier 1, non-entry-level rate of about $28 per hour. One of the stipulations in the 2011 UAW-Ford agreement was that only 20-percent of the total hourly workforce could be paid the Tier 2 wages agreed upon in 2007; after that, those workers had to be moved to Tier 1. Even so, the new Tier 1 status makes them less expensive to Ford than veteran Tier 1 workers because they receive fewer benefits. However, Automotive News had reported that same day that Ford was 69 workers shy of the limit, and when AN asked Ford about the situation Ford said it had "some room" on the entry-level roster. If workers do move to the higher pay grade, it will be the first time that's happened since the two-tier system was agreed. But it sounds like there's going to be some haggling between the UAW and Ford before that happens. Ford is the only one of the Detroit 3 automakers to have to work with a cap, since it didn't go through bankruptcy proceedings during The Great Recession; General Motors and Chrysler jettisoned the cap in 2009. GM is said to have 16 percent of its hourly workers at Tier 2 while Chrysler has 42 percent, but Fiat-Chrysler CEO Sergio Marchionne has long been opposed to the two-wage system. The UAW is preparing for its 2015 negotiations with the US automakers. It wants to eliminate the difference in pay by going to the higher scale, if there is a consensus among automakers it seems to be that they also want a single wage, but less than the higher scale, with the addition of profit-based bonuses. The recent statement from the labor union is below. UAW President Dennis Williams and UAW-Ford Vice President Jimmy Settles announced today that the union is delivering on its promise to convert workers DETROIT, Jan. 30, 2015 /PRNewswire/ -- UAW President Dennis Williams and UAW-Ford Vice President Jimmy Settles announced today that the union is delivering on its promise to convert workers making entry-level wages to traditional employees. "The 2011 UAW-Ford agreement allows for a contractual limit of entry-level employees. Once that threshold is surpassed, entry-level employees convert by seniority to 'regular, non-entry level employment.' At this time, fifty-five UAW-Ford workers will receive the wage increases, which put them in the category of non entry-level employment.

Ford Q3 pretax profits drop to $1.18B

Following positive third quarter financial results recently from General Motors, rival Ford took a tumble in Q3. The automaker posted pre-tax profits of $1.18 billion, compared to about $2.59 billion in Q3 2013, a drop of around 54 percent. Net income also suffered with $835 million made in the quarter, versus $1.272 billion last year, a decline of about 34 percent. The Blue Oval blamed the gloomy figures on three reasons in its release: "lower volume, higher warranty costs and adverse balance sheet exchange effects."
There were problems of one kind or another in practically every region. North America experienced higher warranty costs than expected, partially due to recalls. The sales volume for the quarter was 665,000 units, versus 725,000 in Q3 2013, and pre-tax results amounted to $1.41 billion versus $2.296 billion last year.
South America and Europe both posted worse pre-tax results than last year. On the bright side, European volume was up slightly to 321,000 vehicles, from 303,000 in Q3 2013. The Middle East and Africa also lost $15 million, but that was an improvement compared to the $25 million loss previously experienced in this region.