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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

Subaru suppliers rely on gray market labor

The Subaru Forester is currently the Japanese brand's bestselling model in the US. A new investigation by Reuters is making some scathing allegations about how the popular model is actually made, though. The piece claims that many of Subaru's suppliers in Ota, Japan, are using low-paid foreign workers and asylum seekers to produce components that go into the CUV. The report says that these laborers are coming from places like China and Bangladesh, and they allegedly receive a pittance compared to their Japanese counterparts. Many said that they get about $6.60 an hour, but employment brokers can take a large portion of that pay. At just four suppliers Reuters estimates there are 580 foreign workers, or about 30 percent of the total workforce. The situation has turned Ota into a cultural melting pot because of the significant population of immigrant labor. The problem stems in part from Japan's tiny labor market, and the country's odd asylum system that doesn't allow some applicants to work legally. These suppliers produce many components for the Forester, including the seats, shocks, and fuel tanks. Reuters admits that the businesses have contracts with other Japanese automakers, as well, but Subaru receives the main focus of this piece, which you can read in full, here. When asked for comment about Reuters' report, Subaru of America provided Autoblog with the following statement: "Fuji Heavy Industries does not condone the exploitation of any class of worker, either in its own operations or within its supply chain. FHI expects all employees to be treated fairly, with dignity and respect and to be provided with appropriate workplace protections. The FHI CSR policy respects and adheres to the law and regulations of business as well as upholding human rights and international standards of behavior and the ethical standards of our stakeholders. Our supply chain network has been made aware of our policy and expectations."

Subaru confirms new Outback to debut in New York

Performance enthusiasts may think of the WRX and BRZ when the name Subaru comes to mind, but for many others, the brand is best associated with the Outback. The soft-road version of the Legacy (and the Impreza-based Outback Sport that preceded the XV Crosstrek) is a vital product for the Japanese automaker, which has now confirmed it's bringing the latest version to the New York Auto Show in just a couple of weeks from now. There's little to go on from the teaser image above (which you can click to enlarge) and the press release below, which says only that "The all-new Outback is Subaru's flagship crossover model which blends Car-like handling and SUV capability." And that much we knew already. It's safe to assume that, like previous versions of the Outback, the new model (which we recently spied undergoing testing) will be based closely on the latest Legacy, albeit upgraded with a higher ride height, lower body cladding and other off-roading enhancements. Watch this space for more. All-New Subaru "Outback" to Make World Debut at 2014 New York International Auto Show Tokyo, April 3, 2014 – Fuji Heavy Industries Ltd. (FHI), the maker of Subaru automobiles, today announced that the all-new "Outback" (US specifications model) will make its world debut at the 2014 New York International Auto Show (Press day: April 16 and 17; Open to the public from April 18 through 27, 2014). The Outback will be unveiled at the press briefing scheduled for 10:55 AM EST on April 17 at Subaru booth following a speech to be made by FHI President & CEO, Yasuyuki Yoshinaga. The all-new Outback is Subaru's flagship crossover model which blends Car-like handling and SUV capability. The special site opens today at 22:00 (Japan time) on the Subaru Global Site. http://www.subaru-global.com/2014ny.html The site will feature information updates relating to the New York International Auto Show including Subaru's press conference.