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By Counterman
link hidden, please login to view’s Executive Committee announced it welcoming Robert Roos, effective July 1, 2024, in a show of its focus on North America. Roos is the president & CEO of link hidden, please login to view – APSG and president of NEXUS North America. “With a robust career of over 40 years in the automotive industry, Robert has held key positions that underscore his expertise and leadership,” NEXUS said in a recent press announcement.
According to NEXUS, the appointment “aligns with the company’s increased ambitions in North America, aiming to accelerate the growth plans of N!’s OEM partners and gradually integrate a growing number of North American partners.”
This objective will be supported by a more active presence of the NEXUS team in Grapevine, Texas, at APSG’s headquarters. Besides its “growth accelerator” prime goal, this presence will enable the proactive deployment of NEXUS initiatives such as Mobilion, Marketparts and Smartparts, the company said.
Roos actively participates in multiple industry committees including the Education Committee within The Auto Care Association, The AWDA Board of Governors, and the University of the Aftermarket Foundation, demonstrating his commitment to advancing the automotive sector through collaborative efforts and industry-wide initiatives, NEXUS added.
“I am honored to take on this role at such a significant time for NEXUS. Together, we will continue to drive innovation and growth, ensuring that NEXUS remains at the forefront of the automotive aftermarket industry,” Roos said.
Gaël Escribe, NEXUS Automotive International CEO, said: “We are thrilled to welcome Robert to N!’s Executive Committee. Our focus on growth in this region is encapsulated by our new motto ‘Brightening our future’, which perfectly reflects our vision for growth and innovation in the coming decades.”
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By Counterman
During HDA Truck Pride’s recent Annual Meeting, attendees raised $35,000 for Kids Matter International.
link hidden, please login to view Kicking off its 2024 Annual Meeting, HDA Truck Pride hosted a Cornhole Tournament & Welcome Dinner, where teams competed in a friendly yet spirited competition, with all proceeds being donated to Kids Matter International. Throughout the week there were additional opportunities for attendees to contribute to the charity partner and make an impact.
“We are honored to partner with Kids Matter International and incredibly proud of our network for their passionate efforts in being able to raise $35,000 for kids in need. The Kids Matter commitment to the Grapevine community deeply resonates with the values we hold within our HDA Truck Pride network. We’re all about communities coming together to help each other and protect future generations. What better way to do that than through some friendly competition?” said HDA Truck Pride President & CEO, Tina Hubbard.
Founded in 2006, Kids Matter International has been instrumental in providing essential resources and educational opportunities to children in need in the Grapevine, Texas, area. From providing new clothing, shoes, books, and backpacks, to offering educational programs, Kids Matter International empowers children and instills hope for a brighter future, HDA Truck Pride explained.
For a child who lives in poverty, wearing tattered, worn-out clothes and shoes can negatively impact their self-esteem and confidence. It can also negatively impact their ability to learn when not appropriately dressed for weather conditions. With a donation of $100, Kids Matter International provides up to $350 worth of new clothes and shoes to a child in need, the organization said.
“This donation will enable us to provide clothing to an additional 350 kids in 2024, resulting in a total value of $122,500 in new merchandise,” expressed Marti Conner, president & CEO of Kids Matter International. “On behalf of the children we serve, we extend our heartfelt gratitude to HDA Truck Pride and the attendees for making a significant difference in the lives of these children.”
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By Counterman
This article, contributed by Tom Cook, is courtesy of link hidden, please login to view
All companies engaged in the global supply chain seek to lower the “landed costs” on their goods in imports and exports sales, purchasing and operations.
While there are numerous components that make up “landed costs,” duties, taxes and tariffs are a huge factor and can often be a detriment to global trade.
Duties, taxes and tariffs are costs borne by the importer as the goods enter a country. These fees are assessed by the country’s local customs authority. In the USA, this is the U.S. Bureau of Customs Border and Protection (CBP).
These fees are determined by what the product is and where it is from. The “what” is known as the HTS (Harmonized Tariff Schedule) and the “where” is the actual origin country of the product.
While some of the guidelines are standardized from one country to another, we must understand that the customs rules and their interoperation often vary differently from one country to another. Sometimes the differences are slight and in other countries the differences are huge.
The importer of record (IOR) has the primary responsibility to determine the correct HTS and origin upon entry of the goods for customs clearance in the country of import.
Most importers utilize the services of freight forwarders, customhouse brokers and/or 3PL’s to provide these clearance services, as well as rely on their expertise to accomplish the clearance process in a successful and compliant manner.
Importers may also obtain the assistance of these service providers in determining the correct HTS classification and
the origin.
Importers are legally responsible to exercise:
• Due Diligence
• Reasonable Care
• Supervision & Control
These standards are the responsibility of the importer of record (IOR). If the IOR outsources the responsibility to a customs broker, under the “supervision & control” standard, the IOR is still responsible for supervising and controlling for the statements and information provided by this third-party on their behalf.
This standard requires the importer to have a working knowledge of the import regulations and be able to properly supervise their outsourced provider.
Customs recognizes that an importer may need guidance in the clearance process. This may be received from CBP, a qualified consultant, a customs attorney or a practitioner that has expertise in customs regulations.
It is critical to understand the steps in managing duties, taxes and tariffs. The first is to understand how the import regulations apply, followed by learning what measures can be taken to mitigate the risk and cost associated with duties, taxes and tariffs. If the origin and the classification are the controlling factors, it is important to understand that this is where the answers lie to mitigation.
For example, Section 301 tariffs on certain goods exported from China into the U.S. may add as much as a 25% surcharge to the import landed cost. This resulted in many companies seeking out alternative sourcing options to avoid this surcharge.
In addressing alternative sourcing options, nearshoring, reshoring and friend shoring – countries such as but not limited to Vietnam, S. Korea, Taiwan, Malaysia – all presented viable options.
In some situations, the acquisition cost may have been higher, but when calculating the landed cost, with the 25% duty eliminated, the comparison demonstrated a viable alternative to the importer.
Companies involved in aftermarket sales, where margins are tight, can benefit from this type of analysis and mitigation strategy.
Another strategy involves the Harmonized Tariff Schedule, or what the product is, from CBP’s perspective.
First, we want to make sure we are utilizing the proper HTS number. It can be possible that the correct HTS number, when changed, will offer a lower duty rate.
Secondly, what we refer to as “Tariff Engineering” is a legitimate manipulation of a product’s design or materials that impacts its classification and potentially lowers the duty rate.
The choice of materials, the functionality of the product, product specifications or qualities all impact how a product is classified.
For example, changing the make-up of the materials utilized in fabrics, such as the mix of cotton, rayon, nylon, etc. will change the classification of a product. Features such as changing the product to be waterproof and adding other qualities may also change the tariff classification and impact the duty rate.
Another example may be how the product is designed; for example, for personal utilization or for commercial application, may have an impact.
How parts and equipment are assembled and utilized can also have an impact on the classification as well as the origin.
The amount of “value-add” in the manufacturing or assembly process can also impact how CBP will view the origin and/or the HTS, therefore directly impacting the duty rates.
Tariff Engineering requires R&D, engineering, and technical support, as well as guidance from trade professionals that can assist in interpreting the import regulations and research prior CBP rulings.
CBP has a great resource called CROSS which is a searchable database of CBP rulings that can be retrieved based on simple or complex search characteristics using keywords and Boolean operators. CROSS has the added functionality of cross-referencing rulings from the initial search result set with their modified, revoked or referenced counterparts.
Rulings collections are separated into Headquarters and New York and span the years 1989 to present. Collections can be searched individually or collectively.
CROSS can be an excellent resource in managing the impact of duties and tariffs on
landed costs.
Duties, taxes and tariffs often emanate from political and economic positions from government offices and agencies. We witnessed this when President Trump put forward the 232 and 301 Tariffs in his first year in office.
China then secured retaliatory duties. We have seen these similar actions in the EU, Australia, Mexico and Canada.
Personnel in the aftermarket engaged in global supply chain purchasing, sales and operations need to pay attention to the political and economic situations in the countries they do business in, as regulations impacting duties and tariffs change frequently with both positive and negative consequences.
Additionally, trade organizations’ lobbying efforts should be followed with the Executive Branch and Congress. These efforts seek to keep open free trade concepts and minimize the utilization of duties and tariffs as political and economic weapons in global affairs.
Studies have been accomplished that clearly demonstrate the negative impact of tariffs on manufacturing, distribution, and trade costs in the global supply chain.
While many tariffs are designed to protect industries or certain markets, they generally wreak havoc in global trade and have negative impacts.
The automobile industry, its suppliers and ancillary industries such as the aftermarket are significantly impacted by duties, taxes and tariffs.
In controlling “landed costs,” duty and tariff mitigation as outlined above are all good strategies, but there are other options that also should be considered:
• Utilization of Foreign Trade Zones
• Consolidating Transportation Providers and Carriers
• Running annual Freight RFP’s
• Choice of INCO Terms
• Alternative Sourcing
• Free Trade Agreements
• Location and methodology in warehousing, fulfillment, and distribution
• Utilization of Technology
• Demand Planning Systems
In summary, developing strategies in tariff mitigation is a viable solution to duty and tariff management and ultimately lowering landed costs and enhancing your company’s competitiveness in both import and export purchasing
and sales.
Thomas Cook is Managing Director of Blue Tiger International, a global consultancy advising on supply chain management, trade compliance, purchasing, trade and disruption management, global business and logistics. For more information, go to www.bluetigerintl.com. Tom can be reached directly at [email protected].
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By Counterman
Trade associations for the major automakers and parts manufacturers recently
link hidden, please login to view urging lawmakers to pass legislation including the restoration of full first-year deductibility for research-and-development (R&D) expenses. Co-signing the letter were the Alliance for Automotive Innovation; American Automotive Policy Council; Autos Drive America; MEMA, The Vehicle Suppliers Association; and the Truck and Engine Manufacturers Association, which collectively represent millions of workers in the auto industry.
“Congress must restore this tax provision to enhance U.S. competitiveness, job creation and innovation as soon as possible,” said Ann Wilson, MEMA’s executive vice president of government affairs. “As this industry is facing massive transformation, R&D is crucial. Many of our members are smaller, innovation-driven vehicle suppliers and are struggling with the financial burden to remain competitive in the global marketplace. Restoration of yearly deductibility goes a long way in addressing these fundamental challenges.”
For almost 80 years, motor vehicle and component manufacturers relied on the availability of full first-year deductibility of R&D expenses. A new law implemented in 2022 now forces businesses to spread that deduction over five years, making R&D exponentially more expensive, the associations assert.
The trade associations lament that the change has been “particularly burdensome for the auto industry, threatening thousands of jobs.” Of the $538 billion spent on R&D activities in the U.S. in 2020, more than $23 billion (4.3%) was invested by the motor vehicle industry, according to the associations.
“More than 10% of U.S. auto jobs are in the R&D space,” said John Bozzella, president and CEO of the Alliance for Automotive Innovation. “The auto industry invested $23 billion in R&D activities in recent years – the third highest of any manufacturing sector. By restoring the full deductibility of R&D expenses, Congress can ensure that investment keeps moving in the right direction – supporting U.S. jobs, expanding American innovation and boosting global competitiveness.”
As the letter is distributed, the trade associations are mobilizing members and employees to urge members of Congress to immediately pass legislation restoring full first-year tax deductibility for R&D expenses to protect jobs and preserve the motor vehicle industry’s financial health and competitiveness.
“American Automakers Ford Motor Company, General Motors Company and Stellantis invest heavily in R&D,” said Gov. Matt Blunt, president of American Automakers Policy Council. “These critical investments are vital if American automakers are going to lead the transportation revolution and offer customers the most innovative products in the world. The ability to deduct R&D expenses is needed to ensure our domestic auto production continues to be competitive in the global market.”
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By Counterman
Executives on AutoZone’s most recent earnings call were upbeat about the growth prospects for the company’s international stores.
AutoZone began publishing its international same-store sales numbers in September, along with its overall FY-2022 fourth-quarter results.
In the fourth quarter, AutoZone’s stores in Mexico and Brazil posted year-over-year same-store sales growth of nearly 15% on a constant-currency basis – compared to 1.7% for the company’s domestic stores.
In the first quarter of AutoZone’s fiscal-year 2023, which ended Nov. 18, same-store sales growth in Mexico and Brazil outpaced U.S. stores again. On a constant-currency basis, AutoZone’s international stores posted year-over-year same-store sales growth of nearly 11%, compared to 1.2% for its U.S. stores.
On AutoZone’s Dec. 5 conference call, CEO Bill Rhodes noted that “international has become a more important part of our growth story and an area where we are increasingly deploying capital.”
“We are very excited about the short- and long-term growth prospects of international,” Rhodes added. “Our expectations are we will continue to grow mature-store volumes both in DIY and DIFM and we plan to accelerate new-store openings over the next several years, ultimately getting to a minimum of 200 international new stores by 2028.”
During the first quarter, AutoZone said it opened five new stores in Mexico and four in Brazil. As of Nov. 18, the company had 6,316 stores in the United States, 745 in Mexico and 104 in Brazil, for a total store count of 7,165.
“These [international] businesses had impressive performance last quarter and should continue to grow at a robust pace for the remainder of fiscal 2024,” said Phil Daniele, who will succeed Rhodes as CEO in January. “We are leveraging many of the learnings we have in the U.S. to refine our offerings in Mexico and Brazil.”
Although AutoZone isn’t breaking out bottom-line data for its international stores, CFO Jamere Jackson provided some insight on profit margins during the question-and-answer session with analysts.
“From a margin standpoint, we’re very pleased with the progress that we’re making on margins – both gross margins and total operating margins,” Jackson said. “In our business in Mexico, which is much more mature than what we have in Brazil, we’ve been very pleased with the actions we’ve been able to take on the merchandising side of the business, and that’s given us a very healthy gross margin in that business.”
Considering “the inherent advantages” of low-cost labor, Jackson added, “it’s a very attractive operating-margin structure in Mexico, and we believe as our business in Brazil matures and scales over time that we’ll see similar advantages in Brazil.”
However, as AutoZone aggressively invests to open new stores in Brazil, Rhodes cautioned that “we’re still losing money there.” Those new stores “are causing a pretty good headwind,” Rhodes added, but such challenges are “not unanticipated.”
While Rhodes and Daniele made a point to highlight the same-store sales growth in Mexico and Brazil during the call, Daniele emphasized that “the No. 1 focus for the remainder of the year will be on growing [market] share in our domestic commercial business.”
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