January 23, 2017
Let's Bury the Idea of a Border Adjustment Tax
There are serious problems with the U.S. corporate tax code: The corporate tax rate of 35 percent is the highest in the industrialized world, and U.S.-based companies are taxed at that rate when they bring overseas profits back into the country. House Republicans now have a prime opportunity to undertake corporate tax reform, and they've proposed some pro-growth ideas. Unfortunately, writes David McIntosh at Investor’s Business Daily, all of that good reform could be wiped out by a separate complicated proposal from the House GOP that amounts to a costly new consumer tax called the Border Adjustment Tax (BAT). About one-third of the durable goods that Americans buy are imported, and that number trends higher for those in the low- and middle-income brackets. The BAT will also kick in for new car purchases, car repairs, and even at the gas pump. Imported crude oil and imported auto parts, even for the many parts that manufacturers use to build cars in the U.S., will all be subject to this new tax. Click here to watch AIADA President Cody Lusk talk with the CBT Automotive Network about why BAT should matter to dealers. Read more of McIntosh’s piece on why the BAT is bad news for businesses and everyday Americans here.
Trump to Sign Executive Order on Plan to Renegotiate NAFTA with Mexico, Canada
According to NBC News, President Donald Trump is expected to sign an executive order as early as today stating his intention to renegotiate the free trade agreement between the United States, Canada, and Mexico, a White House official told NBC News. Eliminating the North American Free Trade Agreement (NAFTA), which was crafted by former President Bill Clinton and enacted in 1994, was a frequent Trump campaign promise. The deal was intended to eliminate most trade tariffs between the three nations, increase investment, and tighten protection and enforcement of intellectual property. U.S. manufacturing exports to Canada and Mexico, the United States' two largest export markets, increased 258 percent under the agreement, according to the website of outgoing U.S. Trade Representative Michael Froman, and the deal helped create a trade surplus in agriculture and manufactured goods. Still, the new president blames it for destroying America's manufacturing sector and called it "one of the worst deals ever" during an October debate with Hillary Clinton. For more on President Trump’s plans to renegotiate NAFTA, click here.
Wal-Mart Muscles Into Auto Sales
According to Automotive News, Wal-Mart Stores Inc., the nation's largest retailer, is jumping into car sales through partnerships with dealership groups, including AutoNation Inc., the nation's largest new-vehicle retailer. CarSaver, an online auto retail platform, will launch the program April 1 at about 25 Wal-Mart Supercenters in four markets: Houston, Dallas, Phoenix, and Oklahoma City. Ally Financial is the program's preferred lender. CarSaver's digital platform allows car shoppers to select, finance, and insure a vehicle through its website or on a touch-screen kiosk, backed by bilingual auto advisers available by phone. Staffers at CarSaver Centers – set up inside Wal-Mart stores across from checkout lanes and alongside other services, such as vision centers and nail salons – will explain the car-buying program to Wal-Mart customers. CarSaver then will connect customers with a local, certified dealer and schedule an appointment to visit the dealership. If a shopper doesn't contact the dealership, an auto adviser reconnects with that shopper. For more on Wal-Mart’s entrance into the auto sales space, click here.
Will the Next Luxury Flagship Be a Truck?
European luxury sedans have long been identity builders for their brands. But, reports Automotive News, with surging sales of crossovers, that may change. Many brand executives, dealers, and market watchers agree: Cars such as the Mercedes-Benz S class and the BMW 7 series remain their brands' flagship vehicles. And cars generally still make up the majority of luxury volume for some European brands. When compared with their crossover counterparts, European luxury sedans today have the strength of higher prestige pricing and more cutting-edge technology. But that is evolving. As ultraluxury brands such as Bentley, Lamborghini, and Rolls-Royce introduce crossovers priced well into six figures, automakers such as BMW and Mercedes are looking at higher-priced, more technology-packed crossovers of their own. Meanwhile, truck sales are quickly catching up for some European luxury brands and likely to soon pass car volume. As that happens, European luxury SUVs and crossovers will become image builders in their own right. For more on the shifting luxury auto market, click here.
Car Buyers Will Find Good Deals This Year
U.S. car shoppers will find plentiful deals, relatively low interest rates and lots of high-tech choices in the market this year, reports The Detroit Free Press. "It's a good time to buy a car now, and it should be for the rest of the year," says Jessica Caldwell, an analyst with the car-shopping site Edmunds.com. New-vehicle sales hit a record of 17.55 million in the U.S. in 2016. While they're not expected to top that this year, demand is still strong. Many of the factors that fueled sales last year are still in place, like solid consumer confidence and low gas prices. New technology like Apple CarPlay and automatic emergency braking is luring buyers. And many people still need to replace aging cars. The average age of a vehicle on U.S. roads is climbed to 11.6 years in 2016. Click here to read about several items dealers can watch for in the car market this year.
Around the Web
CR-V Trumping Civic? Not Without a Fight [WardsAuto]
How Much is Too Much for a Car Payment? [USA Today]
Millennials Growing Force at Barrett-Jackson [USA Today]
11 Outrageously Fancy Cars You Can Buy This Weekend [Wired]