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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

How new car shortages may impact your buying experience

If you want further proof that the auto industry is bouncing back, look no further than the empty lots and forecourts of your local dealership. According to a story by The Wall Street Journal, continued high demand for mainstream cars is overtaxing automakers' ability to produce enough models. Several dealers interviewed for the story are reporting two-week supplies as opposed to the typical two-month allocations.
With sales expected to hit 1.4 million units when August numbers arrive shortly and incentive spending down to its lowest amount since January, these limited supplies are pushing prices even higher. For example, according to the WSJ, the average price of a Ford Fusion is up past $26,000. Unfortunately, it's difficult for manufacturers to increase production quickly. If it invests in its facilities, as many manufacturers have done, it risks wasting cash if growth suddenly slows. At the same time, the momentum gained over the past several years could be short lived if vehicle supplies continue to dwindle. "Manufacturers are in a precarious situation," notes Karl Brauer, a senior director at Kelley Blue Book.
Low interest rates and a wealth of desirable features are also allowing customers to purchase more expensive vehicles while justifying their higher overall price tags, a situation that is compounding supply shortages. Even now, during the annual end-of-summer clearance season, deals on new vehicles are remarkably difficult to come by. According to the report, the Toyota Corolla is in a self-inflicted state of shortage, as Toyota clears out inventory in anticipation of the new 2014 generation arriving in dealers. Ford's supplies should rebound as Fusion production comes on line at its Flat Rock, Michigan factory. The Chevrolet Impala, Honda Odyssey, Civic, and Accord and Subaru Forester are also facing shortages.

Catch the rally bug in one easy step at Wales Rally GB

You should go watch a rally. Yes, you. And by "a rally," I mean pretty much anything that could be considered a rally. Is there a grassroots rallycross event near you featuring some $500 beater Subarus mucking about in a field? Go to that. Or a full-blown WRC event. Set your coffeemaker to kick out some extra-potent brew, because you'll probably have to wake up early and drive for a bit to see something. But trust me, it'll be worth it. In Europe, with hundreds of events concentrated in a relatively small geographical area, in all sorts of environments (snow, forest, dirt, you name it), this is a lot easier. North America is huge. Your TV is closer, your couch is comfortable. That's the challenge for hooking new rally fans in America. So, why get off your tail? I travelled to Wales, the tiny windswept country on the western edge of Great Britain, to find out. First, we stopped by David Higgins' rally school, parked at the top of a sheep-studded ridge in the middle of nowhere. This was a two-part trip. The first bit was a visit to David Higgins' rally school, parked at the top of a sheep-studded ridge in the middle of nowhere. The second part was the main event: watching the headline rally event in the UK – WRC Wales Rally GB – in what amounted to a tropical storm at winter temperatures. Despite the challenges, it was one of those trips that left me smiling the whole time. At the Higgins Rally School, we had a very abbreviated experience, essentially the highlights of a multi-day course condensed into a few short hours. The first was learning how to do J-turns on mud, in an old UK-market Ford Escort ... with right-hand drive, and so, a left-hand manual shift, which made it much harder to nail the technique with the "wrong" hand. Then, it was off for a lap with an instructor in the passenger seat in a rear-drive-converted Subaru Impreza WRX – flying through gravel, mud, within spitting distance of piles of logs. That was exhilarating. Or at least, it was, until the ride-alongs with the pros. Jimmy McRae, a storied driver and father to the late and even more storied Colin McRae, was behind the wheel. The car was an early 1990s Prodrive-built Legacy, a real works car, and it made demonic noises as McRae flew through the woods, mostly sideways.