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Japan may aid carmakers facing U.S. tariff threat

TOKYO — Japan is considering giving carmakers fiscal support including tax breaks to offset the impact from trade frictions with the United States and a sales-tax hike planned for next year, government sources told Reuters on Wednesday. Going into a second round of trade talks with the United States on Sept. 21, Japan is hoping to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement that could put it under pressure to open politically sensitive markets, like agriculture. "If the trade talks pile pressure on Japan's car exports, we would need to consider measures to support the auto industry," a ruling party official said on condition of anonymity because of sensitivity of the matter. The auto industry accounts for about 20 percent of Japan's overall output and around 60-70 percent of the country's trade surplus with the United States, making it vulnerable to U.S. action against Japanese exports. Japan's biggest automakers and components suppliers fear they could take a significant hit if Washington follows through on proposals to hike tariffs on autos and auto parts to 25 percent. Policymakers also worry that an increase in the sales tax from 8 percent to 10 percent planned for October 2019, could cause a slump in sales of big-ticket items such as cars and home. Prime Minister Shinzo Abe has twice postponed the tax hike after the last increase from 5 percent in 2014 dealt a blow to private consumption, which accounts for about 60 percent of the economy. To prevent a pullback in demand after the tax hike, the government may consider large fiscal spending later when it draws up its budget for next year, government sources said. "One option may be to greatly reduce or abolish the automobile purchase tax," one of the government sources said. The government is also considering cuts in the automobile tax and automobile weight tax to help car buyers, the source added. Reporting by Izumi Nakagawa and Tetsushi KajimotoRelated Video: Image Credit: Getty Government/Legal Isuzu Mazda Mitsubishi Nissan Subaru Suzuki Toyota Trump Trump tariffs trade

Illinois’ pro-union stance kills bid for Toyota-Mazda plant, report says

Mazda and Toyota are fielding bids from states eager to land its new prize: an all-new $1.6 billion U.S. plant where the Japanese automakers would jointly build electric vehicles and employ around 4,000 workers. Now we can apparently scratch Illinois off the list of contenders. According to Automotive News, the Land of Lincoln has been disqualified due to a lack of shovel-ready sites and the state's lack of a right-to-work law curtailing union membership. Mark Peterson, the president and CEO of economic development agency Intersect Illinois, told the publication he's been informed Illinois is not among the three or four finalists for the facility. It's believed those finalists are all in the South. Peterson said that "many national site consultants charged with making recommendations for corporate relocations and expansions will not even consider a state that is not a right-to-work state. In this case, the three states I am told are still in the running are all right-to-work states." The Midwest may be the ancestral home of U.S. automotive manufacturing, but the South has made major inroads in recent decades, with the likes of Honda, Mercedes-Benz, Nissan and Toyota all opening plants there, among others, thanks to lucrative tax incentives and the absence of labor unions. Recent years have also seen so-called right-to-work laws, which prohibit union dues and membership as a condition of employment in organized workplaces, spread to traditional labor strongholds such as Michigan and Wisconsin. The new joint venture plant, which would start operating in 2021, would be capable of producing 300,000 vehicles a year, with production divided between the two automakers. Mazda and Toyota would also take small stakes in one another as part of the deal. It's expected that at least 15 states have submitted proposals to attract the plant. Expect the Illinois news to trigger a new round of debate over the role of organized labor in the modern economy.Related Video: Image Credit: Reuters Green Plants/Manufacturing Mazda Toyota

Automakers are offering more fuel-efficient cars than ever

Even with gas prices near their lowest point in more than a decade, Americans are still concerned about the fuel economy of their cars. More than 4 in 5 consumers say gas mileage will be an important consideration the next time they go shopping for a vehicle, according to the results of a new survey conducted by the Consumer Federation of America, which were released Monday. That's no surprise, says Jack Gillis, director of public affairs for the nonprofit organization. "Consumers have had a long history with volatile gas prices," he said. Though motorists have saved approximately $12 billion this year at the pump compared to 2015, according to AAA, car shoppers expect gas prices to rise again in the future. The average respondent to CFA's survey predicted a price of $3.50 per gallon within the next five years, a figure in line with projections made by the US Energy Information Administration. When those consumers visit dealerships, they'll have plenty of options. More models than ever are achieving 30 miles per gallon or more, according to CFA's annual analysis released in conjunction with the survey, and 15 of 16 major car companies improved their fuel efficiency on their 2016 model-year offerings. Only Ford backslid year over year, per the report. Researchers say American consumers are now enjoying the widest range of fuel-efficient options ever offered, in every vehicle class. Of 1,094 models on sale in 2016, 13.4 percent achieved more than 30 MPGs, an improvement from 11.7 percent in 2015. At the same time, the percentage of gas guzzlers offered for sale has declined. The percentage of vehicles on the market that get 16 miles per gallon or less has fallen from 6.1 percent to 4 percent, says CFA. "Even if you're in the market for a large pickup or SUV, you'd have to go out of your way to find a true gas guzzler," Gillis said. ""Consumers have had a long history with volatile gas prices." – Jack Gillis These results, the CFA suggests, indicate federal standards that prod automakers to invest in fuel-efficient technology are having the desired effect. Manufacturers are keeping pace with the requirements of the Corporate Average Fuel Economy standards, which mandate carmakers achieve a standard of 52.5 miles per gallon in testing, equivalent to about 40 miles per gallon in on-road performance, by 2025. CFA's report singled out Mazda as setting an exemplary standard.