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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.

Mazda engineers say current Skyactiv-X might not suit U.S. market

We've been watching Mazda roll out the 2.0-liter four-cylinder Skyactiv-X engine in Japan and Europe, waiting our turn. When European authorities released fuel economy information for the high-tech motor last June, we wrote, "Mazda has yet to make an official decision on timing for the U.S market's launch of the engine." Automotive News spoke to Mazda engineers in charge of the powertrain, and based on the answers AN got, the question might not be when we get the Skyactiv-X, but if. Seems that the automaker now isn't certain whether the cost/benefit analysis for the U.S. market favors the engine, and there's concern the 2.0-liter might not be powerful enough for us with its current output of 178 horsepower and 186 pound-feet of torque. At the moment, our Mazda3 is served only with a 2.5-liter Skyactiv-G engine producing 186 hp and 186 lb-ft., not too far ahead of the Skyactiv-X. The Skyactiv-X would return better fuel economy, but requires a noteworthy price premium over the Skyactiv-G. The Truth About Cars says the Skyactiv-X has become the top-seller in the Japanese-market Mazda3, even though it costs 27% more than the base, 2.0-liter Skyactiv-G for a 9% improvement in fuel economy. Mazda's not sure U.S. customers would care much for that kind of math. Engineer Yoshiaki Yamane told AN, "Maybe U.S. customers require more power, because fuel economy is not the top requirement." There isn't much Mazda can do about the tech-heavy engine's cost, since pricey equipment like the high-pressure fuel injection and combustion systems, supercharger, three-way catalyst, and 24-volt mild-hybrid system provide the mileage gains that are the engine's reason for being. Instead, engineers are researching the system's effects with larger displacements. If it works as desired, a larger and more powerful Skyactiv-X could come to the U.S. on the large-vehicle architecture Mazda's developing for new sedans to arrive in a couple of years. That's the hope, at least. Remember, Mazda's Skyactiv-D was meant to go into the 2014 Mazda6, but didn't because Mazda said it needed more time to find "the right balance between fuel economy and Mazda-appropriate driving performance." After five years of "Soon," the engine showed up on the 2019 CX-5 that starts at $42,045. Based on that template, it could be awhile before we know how the U.S.-market Skyactiv-X story ends. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences.

Weekly Recap: Tesla loses money, still dominates the news

Some people get an inordinate amount of attention. In politics, it's Donald Trump. In football, it's Jim Harbaugh. And in the auto world, it's Elon Musk and his always-fascinating electric car company, Tesla Motors. General Motors is spending $877 million to upgrade a factory. So what! US auto sales are up. Who cares? Tesla has a metal snake that will recharge your car! So was the week in Tesla – er, the industry. Snarkiness aside, Tesla did dominate the news cycle, led by the announcement the company lost $184 million in the second quarter. Tesla also said it expects to deliver between 50,000 and 55,000 vehicles this year, and is preparing for a full launch of the Model X crossover in September. Musk also made news during the earnings call by simply not answering a question about ride sharing, leading to speculation Tesla could be considering its own operation. While the financials were the arguably the most important company news, reports of a Model S cyber hacking were more compelling fodder for Tesla followers. Researchers were able to attack the sedan and bring it to a stop, though they required access to the car first. Tesla says it already has deployed a remedy for the situation. On a lighter note, Tesla published a video of its metal charger prototype that autonomously uncoils like a snake to power up the company's vehicles, provoking plenty of humorous comments and comparisons. Watch it and decide for yourself. While some of this might seem trivial, much of Tesla's recent attention has been warranted. It's the first startup US automaker in decades to launch from nothing and actually gain traction in the market. Sure, Musk is a lightning rod and Tesla always seems to be in the spotlight. But amid all of the publicity, it easy to lose sight of the new reality: Tesla is a force. OTHER NEWS & NOTES 2016 Chevy Volt lights up 106 MPGe The Chevy Volt's vitals are looking healthier for 2016. The second-generation plug-in hybrid racks up a gaudy 106 miles per gallon equivalent, which is an increase of eight MPGe from the 2015 model. The new Volt can travel 53 miles on electricity, a significant jump from the 2015 Volt's 38-mile range. The new car also has a 420-mile total range when factoring in the capability of the gasoline engine, which is 40 miles greater than the current car offers.