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Episode #1102: Today, we're unpacking the Detroit 3's tariff turmoil with Japan, exploring how "Auction 2.0" is reshaping used-car sourcing, and tracking Delta's AI-driven pricing turbulence as Senators demand answers.
The U.S. automakers GM, Ford, and Stellantis are pushing back against a new trade deal lowering Japanese auto tariffs to 15%, while tariffs on Canadian and Mexican imports stay at 25%. The Detroit 3 warn this imbalance threatens U.S. auto jobs and industry.
- Matt Blunt of the American Automotive Policy Council says any deal that favors Japanese imports over high-U.S.-content North American vehicles is “a bad deal for U.S. industry and auto workers.”
- President Trump boasts of a “massive deal” with Japan involving $550 billion in investments and tariff cuts, calling it a historic win for U.S. automakers.
- Details remain murky on whether Japanese cars and parts will get carve-outs from existing tariffs; the deal comes as Trump threatens to hike tariffs on Mexico and Canada.
- U.S.-Japan talks included Japan’s chief trade negotiator meeting Treasury Secretary Scott Bessent, who says negotiations are “going very well.”
- Japanese automakers continue investing in U.S. production, with significant commitments from Isuzu and Toyota, aiming to boost local manufacturing despite tariff concerns.
According to recent data from Cox Automotive, NADA, and BCG, the traditional used-car auction model is failing franchised dealers due to rising fees, transport costs, and poor condition reports. Dealers are shifting fast to private-party acquisitions (PPA), creating a more local and cost-effective supply.
- Auction-sourced dealer inventory fell from 27% in 2019 to 18% in 2023, while private-party sourcing grew from 10% to 15%.
- Buy fees have increased by about 50%, transport costs are up roughly a third, and lane prices remain inflated, squeezing dealer margins.
- The Manheim Index peaked at 234 in early 2023, but lane conversion rates dropped to 58-64%, below the 70% pre-pandemic norm.
- NADA projects private-party sales will hit 40% of the used market by 2025, signaling a permanent market shift.
According to Sen. Ruben Gallego and other senators, Delta's new AI-based ticket pricing strategy could unfairly hike costs based on individual passenger data. Senators worry this could squeeze consumers financially during tough economic times.
- Senators are demanding clarity on what data Delta uses and how widely the AI pricing will be implemented, currently 3% but planned for 20% of routes by year-end.
- Delta says the AI tech streamlines longstanding dynamic pricing and denies using personal data for individualized offers.
- Critics worry AI could push prices to each consumer’s “pain point,” risking predatory pricing amid inflation pressures.
- Delta pre
Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.
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