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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Jaguar Land Rover to cut $6.8 billion in costs

Jaguar Land Rover reduce costs by $6.8 billion and will push annual production volume to 1 million vehicles under a secret project called Leap 4.5, according to Reuters. The British automaker wants to achieve these ambitious goals by the end of the decade to compensate for the changing market in China and to counteract the price of meeting stricter emissions standards around the world. Leap 4.5 won't mean firing workers or cutting the automaker's $4.5 billion annual research budget. JLR will instead find savings by underpinning more models with modular platforms and by adjusting its supply chain. Future factories like the one in Brazil and the proposed plant in Slovakia also won't be affected by the new strategy. Globally, JLR continues to grow, and deliveries are up two percent through October 2015 to 390,965 vehicles. Business just last month was up 24 percent year-over-year to 41,553 units. However, the auto market's downturn in China has taken a bite out the automaker's success because volume dropped there 32 percent in the third quarter, Reuters reported. A global volume of 1 million vehicles will mean more than doubling 2014's 462,678 deliveries, but JLR has made significant investments to boost production recently. In addition to the future factories, it opened its first plant in China last year and an engine assembly site in the UK. The company also signed a deal with Magna Steyr in 2015 to build an upcoming model in Austria. Related Video:

Our love of SUVs is killing people in the streets

Americans are fond of supersized fast-food meals and colossal convenience-store fountain drinks, even though they're clearly bad for our health and U.S. adults keep getting fatter. We also like large vehicles, and our love affair with SUVs is killing people in the streets. According to a recent investigation by the Detroit Free Press/USA Today, the increase in SUV sales over the past several years coincides with a sharp rise in pedestrian deaths in the U.S. — up 46 percent since 2009, with nearly 6,000 people killed in 2016 alone. With SUV sales surpassing sedans in 2014 and pickups and SUVs currently accounting for 60 percent of new vehicle sales, it's no wonder Ford announced in April plans to cease U.S. sales of almost all passenger cars. And this followed Fiat Chrysler's move to virtually an all-truck, -SUV and -crossover lineup. While the Freep/USA Today investigation found that the simultaneous surge in SUV sales and pedestrian deaths comes down to vehicle size, it also points to a lack of action on the part of the National Highway Traffic Safety Administration (NHTSA), even though it knew of the dangers SUVs pose to pedestrians. Also blamed are automakers dragging their feet on implementing active safety features. Using federal accident data, the Insurance Institute for Highway Safety (IIHS) determined that there was an 81 percent increase in single-vehicle pedestrian fatalities involving SUVs between 2009 and 2016. Freep/USA Today's analysis of the same data by counting vehicles that struck and killed pedestrians instead of the number of people killed showed a 69 percent increase in SUV involvement. As far back as 2001, researchers at Rowan University forecasted a rise in pedestrian deaths as Americans began switching to SUVs. "In the United States, passenger vehicles are shifting from a fleet populated primarily by cars to a fleet dominated by light trucks and vans," the researchers wrote, with light trucks comprising SUVs.