Ford Might Face $1.3Bil Penalty

[ANTAUS]

Autoblog

[jpd80]

They knew what they were doing.......

[slemke]

And the settlement will be much less.  Ford did what they thought was enough to satisfy the requirements.  Looks like a government shakedown to me.  As comments to the article stated, close the loopholes and move on.  We will see what the final amount comes out to be.

[twintornados]

Ahhh, the ole "Chicken Tax" rears it's ugly head...once seen as a way to protect the domestics against foreign intrusion into the NA market now seems to be biting the very domestic it was designed to protect right in the "cargo area" of the vehicles they imported.

[rperez817]

7 hours ago, slemke said:

As comments to the article stated, close the loopholes and move on.  We will see what the final amount comes out to be.

 

1 hour ago, twintornados said:

Ahhh, the ole "Chicken Tax" rears it's ugly head.

 

Best thing would be for the federal government to get rid of what remains of the chicken tax completely. Tariff rates on trucks and cargo vans should be the same as for passenger cars.

[twintornados]

1 hour ago, rperez817 said:

Best thing would be for the federal government to get rid of what remains of the chicken tax completely. Tariff rates on trucks and cargo vans should be the same as for passenger cars.

 

Or, you can just add TC production at a C2 capable plant somewhere here in NA...that was the original intent of the "chicken tax"... to spur manufacturers to bring production to these shores.

[HotRunrGuy]

40 minutes ago, twintornados said:

 

Or, you can just add TC production at a C2 capable plant somewhere here in NA...that was the original intent of the "chicken tax"... to spur manufacturers to bring production to these shores.

 

I thought the Gen3 TC WAS going to MX?

 

https://fordauthority.com/2021/03/ford-planning-next-gen-transit-connect-to-be-built-at-hermosillo-plant/

 

HRG

[twintornados]

10 minutes ago, HotRunrGuy said:

I thought the Gen3 TC WAS going to MX?

 

HRG

 

That would likely be a reason to drop the "penalty"....sourcing the TC from Mexico would be "in compliance" with USMCA and also allow it to be exported to South American markets too.

[akirby]

2 hours ago, HotRunrGuy said:

 

I thought the Gen3 TC WAS going to MX?

 

https://fordauthority.com/2021/03/ford-planning-next-gen-transit-connect-to-be-built-at-hermosillo-plant/

 

HRG

 

That seems to have changed recently.

 

[bzcat]

5 hours ago, twintornados said:

 

Or, you can just add TC production at a C2 capable plant somewhere here in NA...that was the original intent of the "chicken tax"... to spur manufacturers to bring production to these shores.

 

Technically, that wasn't the original intent at all. But it was the effective outcome. 

 

It was called chicken tax because it was a retaliation on West Germany for imposing a 25% tariff on frozen chicken imported from the US. So the US Govt found something of roughly equal value imported from West Germany (i.e. VW Transporter) as the US export of frozen chicken to West Germany and applied the same 25% tariff. The West German 25% tax on imported frozen chicken was removed a short time after the US retaliation but the US never removed the retaliatory chicken tax because US car companies lobbied against it. Ford was actually the most vocal supporter of keeping the chicken tax in place because VW Transporter was clubbing Ford's competing entry in the market (the original cab forward Econoline). So it is kind of ironic that Ford has now incurred the biggest penalty under chicken tax. 

Edited June 4, 2021 by bzcat

[silvrsvt]

On 6/4/2021 at 12:09 PM, akirby said:

 

That seems to have changed recently.

 

 

Since when? I thought it was a shoe in because of the Maverick? Or is Ford expecting the Maverick to pick those sales up for the TC?

[akirby]

35 minutes ago, silvrsvt said:

 

Since when? I thought it was a shoe in because of the Maverick? Or is Ford expecting the Maverick to pick those sales up for the TC?

 

I don't remember exactly.  It was a discussion about Transit Connect and I think it was tied in with the VW alliance and other products.

[silverboost]

Between the money lost from the chip shortage and Covid...Ford is hemorrhaging money along with every other vehicle manufacturer.   These exec's have got to be stressed to the max.

[twintornados]

On 6/4/2021 at 2:26 PM, bzcat said:

.... because VW Transporter was clubbing Ford's competing entry in the market (the original cab forward Econoline). So it is kind of ironic that Ford has now incurred the biggest penalty under chicken tax. 

 

Also ironic that Ford and VW are now, approx. 60 years later, collaborating to build vans together and yet, the "chicken tax" is still in place.

[silvrsvt]

18 hours ago, akirby said:

 

I don't remember exactly.  It was a discussion about Transit Connect and I think it was tied in with the VW alliance and other products.

 

I was under the impression that the EU would get the VW version of the TC and the new TC would be more NA specific and grow a little bit

[akirby]

2 hours ago, silvrsvt said:

 

I was under the impression that the EU would get the VW version of the TC and the new TC would be more NA specific and grow a little bit

 

I must have gotten mixed up with the EU VW version.

[SoonerLS]

On 6/3/2021 at 10:59 PM, slemke said:

And the settlement will be much less.  Ford did what they thought was enough to satisfy the requirements.  Looks like a government shakedown to me.  As comments to the article stated, close the loopholes and move on.  We will see what the final amount comes out to be.

Steve Lehto covered this recently. He thinks it'll get settled out of court because nobody wants to see it settled once and for all by the courts. If Ford fights it and loses, automakers stand to get hammered by it, and if Ford wins, the Feds lose a hammer with which to hammer the automakers. 
 

 

[bzcat]

Ford already lost in court so there is nothing to settle. The only venue left for Ford was the Supreme Court and the Supreme declined to hear the case. So it is game over. Ford owes the tariff and it is also subject to admnistrative penalty and interest. 

 

Basically, Ford is in the "sentencing" phase of the case if that makes sense. The "verdict" phase of the case is over - Ford is "guilty" for not paying the tariff. So now in "sentencing", it is purely administrative... meaning the Govt decides and you pay. There is no avenue to litigate this. You generally can't plea bargain (i.e. settle) once you have already been found guilty. That's why Ford had to disclose the $1.3 billion potential liability in financial filing. 

Edited June 9, 2021 by bzcat

[slemke]

Wouldn’t there be room to negotiate the repayment terms and any penalties?

[bzcat]

14 hours ago, slemke said:

Wouldn’t there be room to negotiate the repayment terms and any penalties?

 

I was responding to the post with video that said it will be "settled out of court".  Ford has already exhausted all court appeals.

 

If a court convicted you of tax evasion on your personal income tax, the IRS will also apply administrative penalty and interest. Those things are generally not subject to court jurisdiction or review because they are administrative. The court is only interested in if you violated the law. The IRS has no incentive to negotiate repayment terms and penalties after you have been convicted. The time to negotiate with IRS is before they took you to court. 

 

 

[slemke]

10 hours ago, bzcat said:

 

I was responding to the post with video that said it will be "settled out of court".  Ford has already exhausted all court appeals.

 

If a court convicted you of tax evasion on your personal income tax, the IRS will also apply administrative penalty and interest. Those things are generally not subject to court jurisdiction or review because they are administrative. The court is only interested in if you violated the law. The IRS has no incentive to negotiate repayment terms and penalties after you have been convicted. The time to negotiate with IRS is before they took you to court. 

 

 

Did you watch the video or read the disclosure?  I got sidetracked thinking this was the tariff, but apparently Ford paid the difference between the 2.5% and 25% tariff or some portion of it anyway.  What they are still fighting and what the video says will be settled out of court are any penalties and that could be an additional 600 million to 1.3 billion…so yes sentencing, but they are still negotiating and/or fighting about that.  It isn’t finished.  Ford did win one round along the way, so it isn’t clear cut.  It is open to interpretation and that is what Ford will use to plead their case for a lesser penalty.  The vans met the standards to be passenger vehicles.  By settling the penalty out of court it leaves the door open for others to try their hand at creatively avoiding the chicken tax and the government to pursue those that do.  If Ford lost that battle in court, it opens others up to being penalized. If they win, it could be the end of the chicken tax and protection for domestic truck production.

[bzcat]

That's my point. The sentencing part of it can't be "settle out of court".

[HotRunrGuy]

On 6/4/2021 at 9:04 AM, HotRunrGuy said:

 

I thought the Gen3 TC WAS going to MX?

 

https://fordauthority.com/2021/03/ford-planning-next-gen-transit-connect-to-be-built-at-hermosillo-plant/

 

HRG

 

I can't get past the Free Press paywall, does this confirm the move to MX?  HRG

 

[bzcat]

Prettu sure the Freep article that is making reference to "analyst" is referring to this one: https://www.just-auto.com/comment/fords-bold-move-to-bolster-na-carless-lineup-comment/

 

 

Quote

The Maverick will be manufactured at Ford’s Hermosillo, Mexico plant alongside the Bronco Sport. Capacity at the plant is around 270,000 units per year and we expect it to be split evenly between the two. That is until the next generation Transit Connect (codename: V758) – also based on Ford’s global C2 platform – joins the Hermosillo line in the second half of 2023.

 

If Bronco Sport and Maverick sales are strong, Ford will probably need to go to 3-shifts at Hermosillo to add Transit Connect. 

Edited June 15, 2021 by bzcat

[Joe771476]

Ford should tell the govt,,  ok we'll pay it, but we'll have to close some factories and lay off some workers!  See what the govt. says then!