Tariffs cost Ford $1 billion in profit and hurt sales in China

Luke Sharrett | Bloomberg | Getty Images
An employee works on a Ford Expedition sports utility vehicle on the assembly line at the Ford Kentucky Truck Plant in Louisville, Kentucky.

President Donald Trump's tariffs are hitting Ford's finances hard.

The second-largest U.S. automaker has suffered $1 billion in lost profits from tariffs on metals imported to the United States, said Ford CEO Jim Hackett in an interview with Bloomberg TV on Wednesday.

The U.S. has a 25 percent tariff on steel and a 10 percent tariff on aluminum imported from several countries, an early step in an escalating trade war that threatens to raise prices on goods and deal a blow to firms in a wide range of industries, including autos.

The tariffs come at a time when Ford is trying to improve its financial health, raise its share price and sink money into developing new propulsion technologies, such as electric powertrains, autonomous driving technology, cloud computing technology for transportation and other mobility businesses.

Ford shares were down nearly one percent Wednesday morning.

“From Ford's perspective, the metals tariffs took about $1 billion profit from us,” he added. “The irony is, we source most of that in the U.S. today anyways. So we are in a good place right now, but if it goes on longer there will be more damage.”

The trade war is also creating difficulties for Ford's U.S. factories. Ford exports Lincoln vehicles from a plant in Louisville, Kentucky to China, where Hackett said the brand is popular. China's tit-for-tat 25 percent tariff hike, which raises the total duty to 40 percent on U.S. autos, has raised the price of the Lincoln MKC sport utility vehicle in China.

In July, Ford cut its full-year outlook, citing in part heavy losses in China in the second quarter.

“We have had to move people in that factory to other functions because of that trade problem,” he said.

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The VW Beetle is dead: Again. Here are 5 other resurrected cars that suffered the same fate

The VW Beetle is dead. Again. Here are 5 other once-resurrected cars that suffered the same fate

Manjunath Kiran | AFP | Getty Images

Robert Ferris | @RobertoFerris

5:20 PM ET Sat, 15 Sept 2018

Occasionally, car companies bring back old nameplates in the hope of stoking nostalgia and giving an old name a fresh new look. But it doesn't always work out.
The revived and redesigned Volkswagen Beetle was apparently one such case. Originally developed at the behest of Adolf Hitler in the late 1930s, the car later achieved astronomical sales figures in the 1960s, and became an icon of the era.
Volkswagen stopped selling the original version in the United States in the late 1970s, but continued to produce Beetles in other countries, then introduced a revived version in the 1990s. The car was a hit with many car buyers: Notably, Hillary and then-President Bill Clinton bought a redesigned Beetle for their daughter Chelsea.
But as sales slowed, Volkswagen decided to pull the plug. On Thursday, the automaker said the production of the car will end next year.
Volkswagen is not alone. Here are some other attempts by car companies to recall the past that did not last.

Comeback

Volkswagen stuck with the new Beetle for roughly two decades, decades but in the end decided it was not worth keeping, as consumers continue to shift into SUVs and crossovers.

Franziska Krug | German Select | Getty Images

Ford Thunderbird

The Ford Thunderbird was a coveted car in the 1950s and 60s. The Beach Boys even referred to the “T-Bird” in one of their hit songs “Fun, Fun, Fun”…

Dean Treml | Getty Images

The 90s version

…But Ford's attempt to release an updated version in the 1990s with retro styling fell flat, and the car was eventually discontinued.

Heritage Images | Hulton Archive | Getty Images

Dodge Dart

Dodge has resurrected a few of its most famous nameplates, such as the Charger, the Challenger, and had tried the same approach with the Dart. The first Dart was an affordable and wildly popular car in the 1960s and 1970s…

Bettmann | Getty Images

Flash forward to 2013

…Fiat-Chrysler brought back the nameplate in 2013 to attract customers looking for small cars. The new Dart probably could not have been much more different from its ancestor, and the car was only in production for a few years. It ended with the 2016 model year.

Bloomberg | Bloomberg | Getty Images

Mercury Cougar

The Mercury Cougar began life in 1967 as a slightly upscale stablemate to Ford's Mustang pony car. It went through several different designs over the years, and slowly morphed into more of a sedate sedan by the time it was discontinued in 1997…

Gabe Souza | Portland Press Herald | Getty Images

Back with a sportier design

…Two years later, though, Mercury brought the Cougar back with a leaner, sportier design with quirky touches, such as bulbous headlights and taillights. It was only in production for a few years before Ford discontinued it.

Scott Olson | Getty Images

Pontiac GTO

One of the original true muscle cars, the GTO was big, loud and fast when it was first released in the mid-1960s. It remained in production for about a decade.

Getty Images

From a land Down Under

Pontiac resurrected the name and slapped it on a modified version of a Monaro, a car made by General Motors' Australian Holden brand. While the redesigned GTO earned praise for its performance, the model was killed after just two years. Soon after that, GM completely ended production of all Pontiac models during its bailout by the U.S. government.

Patrick T. Fallon | Bloomberg | Getty Images

Ford Taurus

When the Taurus was first released in 1985 it was a revelation: A sedan with European styling that could be had at the price of a Ford. It was later replaced with the Ford 500.
That was a mistake, said independent auto analyst and industry veteran John Wolkonowicz. Former Ford CEO Alan Mulally pushed Ford to resurrect the Taurus nameplate.

But the revived Taurus never quite attained the cachet with consumers the original had. Ford has recently said it will discontinue the model in North America, along with nearly all of its other sedans.

more from Autos

The auto industry’s VHS-or-Betamax moment

5GAA | 5G Automotive Association e.V via AP Images
In this image released July 11, 2018, 5GAA, BMW Group, Ford and Groupe PSA exhibit the first European demonstration of C-V2X direct communication interoperability between multiple automakers.

The auto industry has a choice to make: Which language will cars speak when they talk to one another?

Until a couple of years ago, automakers agreed on one vehicle-to-vehicle communications platform, called dedicated short-range communications, or DSRC, based on the technology used for Wi-Fi. But some car companies have begun to favor a competing protocol, known as Cellular V2X, which is based on a next-generation version of the technology used by your mobile phone.

So far, the federal government has held back on enforcing a standard. A proposed rule mandating deployment of DSRC equipment in new vehicles has languished for nearly two years, and critics say the delay is making motorists less safe. But supporters of the competing standard say something better has come along.

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Motorcycle makers try minting new riders with youth programs

“You've got public agencies who want to deploy, but we don't have a standard, so what do I buy?” asked Kirk Steudle, director of Michigan's Department of Transportation and a supporter of the DSRC standard. “Betamax, or a VHS?”

It is a crucial technological choice: Cars are increasingly connected, and the autonomous vehicles that will arrive in the future must have a way to communicate with each other and surrounding infrastructure. But even before self-driving cars hit the streets en masse, there are enormous benefits to be had. Federal transportation officials estimate that, once widely deployed, such communication systems will prevent or mitigate up to 80 percent of all non-impaired collisions and address thousands of fatal crashes per year in the United States.

The auto industry is divided over the standards.

General Motors has embraced DSRC, and it's already a standard safety feature on Cadillac CTS sedans. Toyota and Volkswagen have also committed to make DSRC systems standard equipment on new cars beginning next year. On the other side are brands, including Ford, BMW and Mercedes-Benz, that have joined the chip maker Qualcomm, cellular providers and others to form the 5G Automotive Association, which is pushing the C-V2X standard.

Regardless of the standard that's settled on, vehicles will be able to directly communicate with one another, allowing them to warn of collisions even when drivers cannot see each other. And such systems will allow valuable safety information to be shared from other sources: Instead of a sign warning that “bridge ices before road,” the bridge can warn drivers when ice has actually formed, and traffic lights will be able to manage traffic to minimize delays and clear the way for emergency vehicles.

But there are important differences.

DSRC has been around much longer, and most car companies have developed and tested systems based on the standard. The Federal Communications Commission ruled that a chunk of the wireless radio spectrum would be restricted to the DSRC standard beginning in 2003, and in 2016 the Obama administration proposed a rule that would mandate phase-in of DSRC in new cars and light trucks starting in 2021. The National Highway Traffic Safety Administration said systems to prevent collisions at intersections alone could save some 1,300 lives a year.

John Kenney, director of the Toyota InfoTechnology Center, said his company was ready to move ahead with the DSRC standard. “G.M. is online, too,” he said. “Now, there's a potential risk that maybe it's not going to be DSRC. That just impedes deployment.”

Supporters of the C-V2X standard contend that DSRC is nearly two decades old, from a time when companies didn't imagine streaming video to children in the back seat of a crossover, or updating vehicle operating systems from the cloud. C-V2X's advocates say it would allow for more features, be more flexible and could use cellular infrastructure.

“People assume that just because something is here now and they've been working on it for 15 or 20 years, it will be here 15 years from now,” said Jovan Zagajac, technology manager in Ford's Connected Vehicle and Services group and a member of the 5G group's board. “Well, the world has changed.”

BMW's engineers, for example, see safety advantages if cars can communicate directly with personal devices like mobile phones.

“This will make it much easier to retrofit vehicles and also give the benefits of C-V2X to other vulnerable road users, such as cyclists and pedestrians,” said Joachim Goethel, the leader of BMW's 5G connectivity initiatives.

The division runs deep. This month, the Eno Center for Transportation, a nonprofit established by William Phelps Eno, the road safety pioneer whose work led to New York City's first traffic plan in 1909, published dueling opinion pieces on the standards. One was from a Toyota official supporting DSRC and the other from a Daimler official favoring C-V2X.

Despite the Obama-era proposal, which would require all new vehicles to include DSRC by 2023, the federal government hasn't moved to enforce a standard.

Heidi King, deputy administrator at the National Highway Traffic Safety Administration, said the Department of Transportation was “technology neutral” on communication protocols.

“While our past research has centered around DSRC — because that was the only technology available — we are also exploring other technologies, including Cellular V2X,” she said in an email.

The federal government also has authority over a crucial element of any system: the radio frequency on which it operates. Two members of the Federal Communications Commission recently informed Toyota that the agency was looking at “newer technology” — such as C-V2X — for the 5.9-gigahertz band that has been allocated to DSRC.

“By taking a modern look at the possibilities for wireless services in the 5.9 GHz band, we can support automobile safety, increase spectrum for Wi-Fi and grow the wireless economy,” they wrote in a letter to the carmaker.

The mention of “the wireless economy” hints at another crucial difference between the standards: DSRC has little possibility for monetization, while a cellular system offers the possibility of revenue streams through additional data services. The 5G Automotive Association suggests that next-generation infotainment services used by C-V2X — such as movie streaming or conference calls — would improve the passenger experience.

Car and equipment makers have conducted trials of C-V2X, but even its proponents acknowledge that it will take time to roll out, while DSRC is market ready. It's not just automakers that now have to wrestle with the choice: State transportation departments and many local authorities have been installing DSRC-compatible roadside infrastructure for almost a decade.

In January, 12 state and regional transportation officials, including Mr. Steudle of Michigan, formed the Coalition for Safety Sooner to advocate the protection of the 5.9 GHz band for DSRC and the acceleration of efforts to deploy it.

The group pressed its case in a letter to Transportation Secretary Elaine Chao; Ajit Pai, the chairman of the Federal Communications Commission; and Mick Mulvaney, the director of the Office of Management and Budget. The signatories had already installed or committed to install more than 1,000 DSRC-equipped intersections and roadside units, and outfitted thousands of their own vehicles with the technology.

“Waiting for the next technology solution to be developed, tested and proven misses a huge opportunity to potentially save tens of thousands of lives throughout the United States each year,” they wrote.

A recent study published by the University of Michigan Transportation Research Institute calculated the cost of waiting to deploy vehicle-to-vehicle systems. A three-year delay will allow the sale of millions of new cars and light trucks without them, and those vehicles will remain on the road for an average of 15 years. During that time, they would have millions of avoidable collisions, according to the study, which was written by James Sayer, the institute's director, and two other researchers.

The institute helped with one of the first and largest tests of DSRC technology in Ann Arbor, Mich., involving some 3,000 vehicles. Based in part on that experience, Michigan officials require DSRC-compatible hardware in every new traffic signal in the state.

Mr. Steudle, the ..

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