Toys4RJill

Sulu

You have quoted me out of context. Yes, any tariffs on imported cars will increase the cost of those cars that are built overseas and imported here.

But that does not suddenly make it profitable to build and sell a low number of those vehicles here. Building and selling here has a cost and it will be the same regardless of what tariffs may be on imported vehicles.

If the income an automaker generates by selling a low-volume model (like the Envision, CT6 Hybrid, EcoSport of Focus Active) is LESS than what it costs to build, the automaker is selling at a loss. No automaker will do that for long. How hard is that to understand?

mmarshall

If I did in fact quote you out of context, that was not intentional. I was simply trying to make a point about the tariffs. We live in a new world now...not the one of the past, where a company could just wave a magic wand, ship jobs and production overseas, and make big profits off of cheap labor.

Much of that will depend on the long-term effects of corporate tax cuts in the bill that was recently passed. Those cuts may (?) help profits, especially on domestically-produced vehicles.

Toyota sold Prius models, in the American market, at a loss for a number of years, though I don't know exactly how many. Their big profits on vehicles like the 4Runner, Tacoma, Sequoia, etc..... more than covered it.

SW17LS

You can't argue about business with somebody who just doesn't have any experience with how businesses run lol

Tax cuts aren't going to make individual products more profitable.

mmarshall

Apples and Oranges. A corporation, especially one as large as Ford or GM, doesn't survive or collapse on the profitability or loss of one or a couple of vehicles...the Toyota Prius proved that. What matters is the ultimate corporate bottom line. That's not amateur of having "experience" or not....that's simple Economics 101.

SW17LS

Nobody is saying this car is their life or die product. Its simple, Ford is saying that it doesn't make sense for them to sell this car here if they can't build it in China under the old tariff scheme. Simple.

The ultimate corporate bottom line matters of course, but it doesn't come into play when determining the profitability of one model. For instance I just discontinued a marketing program that we were doing that wasn't profitable. It still wouldnt have been profitable even if my total gross or net profit were 10 times what it is.

Toys4RJill

I am not sure if the Prius example is similar to the Ford example here. Ford is not losing money producing the vehicle, the Trump tariffs do not change how they make the car. The tariffs are added to the car and paid for by US consumers. The money then goes to the US government.

SW17LS

And Toyota chose to sell the Prius at a loss to accomplish an overall goal, to corner the market on the burgeoning hybrid car market...which they did. The two situations as Jill said have nothing to do with each other.

Ford COULD sell the car here at a loss, but they have chosen not to...doesnt change the fact that the loss is because of the tariffs. If you wanted this car and you live in America, the tariffs are why you can't buy it is the point.

Toys4RJill

Makes no sense to do it.

Those advocating for these tariffs haven't been watching what has been quietly going on. China tariffs on US cars are now at 40% (they were increased) while the EU cars have been dropped to 15% Very difficult to say Trump is winning his trade war. Trump should be trying to create jobs in the US clean energy sector and protect those industries with tariffs.

RNM GS3

SW17LS

Exactly...

Theres this idea that the "big bad corporation will just start building stuff here and take the increased cost out of their massive profit" but thats just not reality. The cost of those tariffs WILL be passed on to the consumer, and they will cause reduced choices for our consumers because of carmakers adjusting their offerings based on a different reality.

The other part of it is the US is not the world's only auto consumer. China is already a huge consumer, and will get bigger and bigger, companies like Ford choose to do things like cancel all their sedans in the US and focus their car efforts in other countries. If they can't make money here and they can make money elsewhere they'll go there. If being an "American corporation" becomes too burdensome for them, they'll just become a corporation somewhere else.

mmarshall

You may very well be correct.....we'll see. I posted some examples earlier of both the good and bad decisions that Ford has made. I agree they are neglecting sedans too much at the cost of trucks and SUVs.

SW17LS

Ford is not going anywhere. On top of the truck and SUV market they have here (which has HUGE margins), they have a great car business in Europe, it goes on. Theres a reason why Ford was the only US automaker that didn't need a government bailout.

mmarshall

They laid off huge numbers of employees, for one thing, which contributed to the double-digit unemployment numbers of the early Obama years, before those numbers began to improve. Partly under Obama and partly under Trump, unemployment is much lower now.

RNM GS3