FTZ stands for Foreign Trade Zone. It’s a special area where cars or parts can be kept and worked on without paying import taxes right away, which saves money for companies.
A bonded warehouse is a place where cars or parts can be stored before the owner pays import taxes. It helps companies keep money flowing by delaying those payments until they actually sell the vehicle.
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Welcome to Daily Drive for Monday, November 3rd, 2025.
I'm Kellen Walker in Las Vegas.
Today on the show, the latest updates on the NXPERIA chip crisis.
Nissan reintroduces its StairStep program
and a look at U.S. auto sales for the month of October.
Plus, Alex's partners, Abhijit Bhora, talks to our own Mali Bhoigan
on record inflows to foreign trade zones and the effects it could have on tariff delays.
A lot of our key components which contribute to the final costed bomb are not compliant.
Let's run through all the news you need to know to keep up in the auto industry.
The Netherlands move to seize control of chip maker NXPERIA is fueling trade tensions
with China and raising new alarms over global auto supply chains.
Dutch officials say they acted over concerns
that the company's former CEO was shifting technology and production to China.
Meanwhile, Beijing has blocked NXPERIA's exports,
disrupting the supply of chips used widely in vehicles.
The dispute highlights how geopolitical frictions are again rippling through the auto industry,
threatening to tighten semiconductor supplies just as automakers work to stabilize production.
Nissan is under fire from its dealers, again,
over a return to controversial StairStep sales bonuses.
The automaker revamped its dealer program this summer,
dropping most performance metrics in favor of straight volume targets.
But five months in, many retailers say the new goals are, quote,
unattainable, pushing them to cut prices and sacrifice profits
just to earn bonuses of up to $1,200 per vehicle.
The tension comes as Nissan pushes to grow U.S. retail share to 6%,
part of an effort to revive profits and rebuild dealer trust.
And finally, a look at U.S. auto sales for the month of October.
Toyota's U.S. sales jumped 12% in October,
led by strong demand for the Corolla, 4Runner, Tacoma, and Grand Highlander.
Lexus and Toyota posted consecutive monthly gains,
even as EV sales, the BZ4X and RZ, fell nearly 100%.
Ford is up 1.5%, with pickups offsetting weaker utilities,
while EV deliveries slipped sharply.
Hyundai dipped 2.3% and Kia inched up slightly,
both hit by the end of federal EV tax credits.
Analysts say higher borrowing costs and supply chain pressures
are weighing on the market.
And those are today's headlines.
You can find more details on all those stories at autonews.com.
Now joining me to talk more about Nissan's revival
of the stair-step incentive program is Urvash Kakaria,
who covers automakers such as BMW, Mercedes-Benz, Nissan,
and Volvo cars, just to name a few, for us at Automotive News.
Urvash, welcome back to Daily Drive.
Thanks for having me back, Cal.
So, Urvash, what are dealers' main issues
with the new Nissan One sales program?
Sure, let's step back a little bit and sort of put this in context.
So, Nissan's stair-step programs, or dealer volume bonus programs,
have always been a point of contention with its retailers.
And this goes back to the Carlos Ghosn days,
where Ghosn basically had these overly optimistic
or rather aggressive sales targets
to try and increase Nissan's market share
to as much as 10% at some point.
And what had happened was the dealers,
in order to hit the sales goals and collect the volume bonus,
would get into this spiral of price discounting.
And they would sort of compete with the Nissan dealer down the street
to get the customer's share of wallet.
And that led to heavy discounting.
It annoyed the customers because they would be like,
I went to this store and this car was $1,000 cheaper
than what you're charging me.
So, it kind of hurt the brand.
It hurt the brand perception.
So, in June,
Nissan's relatively new US management
decided to basically scrap the current dealer volume bonus program,
which basically tied dealer compensation
with a number of programs like performance metrics, KPIs, etc.
And they basically said,
most of your dealer variable margin will now be tied to achieving one metric,
and that is new car sales.
Because Nissan's problem is that its market share
has fallen over the past few years
and it needs to do everything it can to increase the market share.
At the end of last year, its market share was like 4.2%,
roughly around 4.2%.
So, the management basically said,
we're going to tie your margin to sales volume targets,
we're going to make them reasonable,
and we're going to give you plenty of time
so you can plan your businesses around it.
Five months later, some dealers are saying
that Nissan has reneged on that commitment.
Basically, they're saying that the volume targets
are still extremely unattainable.
A dealer in a widely distributed email to the network and even beyond
had this scathing commentary
about how these unattainable volume targets
are essentially putting dealers' profitability in treacherous waters.
Basically, these volume goals are too high,
the dealers are again discounting to hit the volume,
to hit the targets and collect the bonus,
and they're doing it at a loss.
My other question for you then is,
why do dealers then, even with more market share,
feel like these goals are unattainable?
Yeah, so the dealer's fundamental issue is,
you can set these targets,
but the product does not have the brand awareness
to essentially generate enough demand to achieve these targets.
Their argument is that Nissan needs to do more in terms of marketing,
which is something Nissan is already doing.
But they feel like more needs to be done
in terms of marketing and advertising
to lift Nissan's brand awareness.
They say that the current prices of Nissan's products,
even though they are relatively new,
are still too high relative to customer perception.
As one dealer said,
the public doesn't perceive Nissan as that TO1 Asian brand,
like a Honda or Toyota.
We're kind of the value brand,
and we've got to price ourselves as such, end of quote.
So this essentially is the fundamental problem.
The dealers say Nissan is not perceived by the customer
as a true rival to a Honda or Toyota.
And so either Nissan does something to increase brand awareness
and brand perception, or they lower their price.
Interesting.
Urvash Kakaria covers Nissan for us.
Urvash, thank you so much for joining me.
Thank you.
Coming up, record inflows to foreign trade zones
hint that automakers are delaying tariff costs.
Abhijit Bora from Alex Partners
breaks down what that means for US supply chains.
That's next on Daily Drive.
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Welcome back to Daily Drive.
I'm Kellen Walker.
Automakers are facing a subtler challenge,
delaying tariffs through record inflows
to foreign trade zones and bonded warehouses.
At the same time, data shows many imported vehicles report
only minimal US-made content.
Abhijit Bora is a director at Alex Partners.
He spoke with our own Mali Boygon
on the Automotive News Shift podcast
about how companies may need
to strengthen domestic supply chains and document sourcing.
A small misstep could trigger major tariff costs.
Here's a piece of their conversation.
The effective tariff rate for finished vehicles,
for that HTS code referring to finished vehicles,
is approaching 25%.
Earlier in the year, obviously pre-tariff,
it was much less, and now post-tariff, it's getting closer,
which indicates to me that the automakers
have exhausted the release of their inventory
that's compliant with the new rules.
In other words, that they're only tariffed
on 25% of the non-US content of the vehicle.
And given that the tariff rate is approaching 25%,
that says to me that there's actually not
that much US content in the vehicles
that are being tariffed right now.
And by right now, I mean in July,
which is the last month of data that we have
because of the government shutdown.
So are you reading that the same way,
and why would that be the case,
given that they're also waiting and seeing
and storing inventory in bonded warehouses and in FTZs?
Yeah, so my perspective,
and this is based on both actual projects,
both on industrial as well as automotive side, Molly,
is that the due diligence, as I said before,
on actual USMCA compliance,
which is dependent by HTS code.
For automotive, it is 75%,
but there are multiple other HTS codes
across different product attributes.
It ranges sometimes.
But that due diligence was very company specific.
There are automotive organizations
within the value chain, large tier ones,
who were very diligent,
who managed the USMCA compliance,
kept all the tracking,
the country of origin tracking,
worked with their legal compliance
and trade lawyers appropriately
to have all this well-tracked,
biannually having all this rechecked
for their key SKUs or key part numbers
being sent to different manufacturers.
So there is a group which did it diligently,
but there's a much larger group
which did it non-diligently.
So now when there is so much spotlight,
focus on USMCA compliance,
a lot of stuff is being found under the carpet.
And majority of the OEMs
had outsourced all this to the suppliers
because in the end,
majority of the OEMs are more of assemblers
than creators, than their integrators.
So they had offloaded this
to their key supply bases, suppliers.
Suppliers, some have done a good job, some have not.
But now when there is that focus
and spotlight on this,
data has been collated and it's found out
that a lot of our key components
which contribute to the final cost of the,
or final costed BOM are not compliant.
Or even if they are on the precipice of compliance
or now they are severely affected
by section 232 and all that,
that is a separate thing.
It's just opening up that wound
where everyone assume under the band-aid
the wound is healed.
And so do you then read that
basically it turns out that
the government is discovering
less US made content
within formerly USMCA compliant vehicles.
And I should say they're still USMCA compliant,
but there's obviously some complexity
with the way that the USMCA interacts
with the present tariffs anyway.
But if you look at the effective tariff rate,
it's not like it just shot up to 25%
when the tariffs took effect this spring.
It's been on the rise to reach this peak in July.
So is your read on that,
that there was a release of compliant inventory
or that the government was basically
not finding these sort of inconsistencies
or variabilities in terms of US made content
and finally kind of reached a place of efficiency
in evaluating the value of US content
or some combination of both?
It's not really focused on that side, Molly.
In the end, the whole concept of USMCA,
it was an incentive to the automotive value chain
or anyone else.
USMCA is applicable to anything that is manufactured
or imported and it applies to Mexico and Canada as well,
even though we are, at the moment,
heavily focused on United States.
Well, the point is that for maximum cost efficiency,
it is depending on the overarching build of material
pre-2025.
Sometimes it's beneficial to not be compliant
because you can pay the 2.5% tax,
but your overall cost,
because you are getting more from least cost country,
best cost country, South Asia,
your overall global value chain is extremely optimized
for a complex assembly.
So paying that 2.5% tax or for a tier one supplier,
they give an option to the OEM that I can be compliant,
but this could be the cost.
And if you want more cost optimization from our side,
manufacturing more or bringing more raw material
or finished goods material from some other region
in the world, in the end, is more cost efficient.
In the end, it's from both selling price,
from tax purposes.
So you play around with all these three levers.
This year, it has become extremely critical
because of this 25% burden,
which is extremely financially challenging
that everyone is evaluating everything
across their supply chain.
So I absolutely do not think there are any surprises
in the fact that a lot of material is being found
to be not compliant.
It's just it's publicly being shared now
because OEMs, the suppliers are telling the OEMs,
we can't absorb this.
We built this value chain because you guys pushed us
for cost efficiency,
not USMCA compliance efficiency, cost efficiency.
Now, OEMs are saying, well, again,
it's like who shares the burden?
Who takes the most burden?
Is it the OEM, the tier one, tier two,
or is it the consumer?
Abhijit Bora is a director at Alex Partners.
He spoke with our own Mali Buegan
on the Automotive News Shift Podcast,
available now wherever you get your podcasts.
That's Daily Drive for today.
I'm Kellan Walker.
Thanks to Automotive News Executive Producer, Jake Neer,
as well as our own Urvash Karkaria
for his reporting for today's podcast.
You can get the latest news on US auto sales,
the next period ship crisis,
and everything happening in the auto industry
at autonews.com.
Come back tomorrow for an interview
with F&I Sentinel CEO, Stephen McDaniel.
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on the origination side of the house for the lenders,
and then we quickly saw a need
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So that was the reason we made the decision
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About this episode
The episode dives into the ongoing NXPERIA chip crisis, highlighting the geopolitical tensions affecting global auto supply chains. Nissan's controversial StairStep sales program is scrutinized, with dealers expressing frustration over unattainable sales targets that lead to profit sacrifices. U.S. auto sales data reveals mixed results, with Toyota showing significant growth while EV sales decline. Abhijit Bora from Alex Partners discusses the implications of record inflows to foreign trade zones and the challenges automakers face with tariff compliance and domestic supply chains.
China eases its Nexperia export ban, allowing select companies to resume chip imports as the semiconductor crisis continues through the industry. EV demand cools as Hyundai dips and Kia is up after federal tax credits expire. Plus, an excerpt from the Shift Podcast with Alix Partners’ Abhijit Boora, on foreign trades and tariff delays.
