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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.

Toyota's Lentz says fuel cells are the future, not EVs

Toyota is not bullish on EVs. That comes from the company's North American CEO, Jim Lentz, who said the company will focus not on electrification, but on continued hybridization with a long-term focus on hydrogen fuel cells.
Lentz questioned the long-range ability of EVs, saying that Toyota feels "there are better alternatives, such as hybrids and plug-in hybrids, and tomorrow with fuel cells." Lentz spoke about Toyota's focus on hydrogen following Forbes Brainstorm Green conference and barely a week after a battery deal between Tesla and Toyota ended, according to Automotive News.
That deal provided for 2,500 battery packs for the Rav4 EV. While valuable to Toyota, the deal "was never about open-ended volume," Lentz said. "It was time to either continue or stop. My personal feeling was that I would rather invest my dollars in fuel cell development than in another 2,500 EVs."

119K Toyota Avalon sedans recalled over airbag woes

Toyota has issued a voluntary safety recall for 119,000 2003-2004 Avalon models because in some cases the airbags could inadvertently deploy.
The automaker says that circuits within the airbag control module could be damaged by electrical noise, which could cause the front airbags and seatbelt pre-tensioners to activate. Dealers are going to repair cars by adding an electrical noise filter to the module. Owners will be notified by first class mail.
Toyota Public Affairs Manager Cindy Knight told Autoblog that there was one reported injury caused by the sudden deployment, but there have been no accidents or crashes. The company is currently preparing the parts for dealers now, and the component takes 90 minutes to two hours to install. "We don't believe there are any other affected models," said Knight.