Trump’s presidency could bode well for America’s automobile industry

Courtesy of Richard Perry
Richard Perry, The Hemet Car Guy.

Greetings from the Hemet Car Guy,

President Donald Trump has stoked anxiety among automakers. If you follow his Twitter account, you will find him either commending or criticizing companies— depending on where they plan to build their cars. GM and Toyota saw their stocks dip after they were the subject of Trump’s tweets.
Ford Chief Financial Officer Bob Shanks called Trump’s Twitter usage “innovative” because it has allowed Trump to bypass traditional media and speak directly to the voters who supported him.
“And there’s obviously times it doesn’t feel particularly comfortable if you’re in the crosshairs,” Shanks said. “But it’s real time and that’s what the guy’s thinking. It’s clear from when the tweets come out and how they’re written, that’s what he thinks. I think that can also be helpful.”
Trump’s Twitter feed has allowed the auto industry to hand him some political wins. He has tacitly taken credit for recent plans that Ford and Fiat Chrysler announced to expand manufacturing in the United States. However, both companies said their plans were not the result of pressure from Trump. In turn, auto companies expect to see tax and regulatory reforms, among other changes, under his presidency.
“Everybody in this industry is kind of realizing simultaneously that [Trump] could be quite good for us,” said Joseph Hinrichs, executive vice president and president of the Americas for Ford Motor Company.
Michelle Krebs, a senior analyst at AutoTrader, said most automakers here in Detroit are focused on the positives as much as the negatives. Some are even optimistic that Trump’s policies could push the industry to an unprecedented eighth consecutive year of sales growth, she said.
Companies are now announcing long-planned expansions of their U.S. manufacturing plants, which suggest they are looking to score points with the new president.
“Donald Trump is a negotiator; this is what he does. There’s deal-making going on,” said Krebs. “The problem is we aren’t seeing the full picture of what deal has been negotiated and what Trump is actually going to be able to get done this year.”
There is plenty Trump and the auto industry seem to agree on. He has called for lowering corporate taxes, rolling back regulations and investing heavily in infrastructure — actions that automakers would see as a boon for their businesses. Trump’s message of bolstering manufacturing in the United States is also something the industry can support, said Hinrichs.
Much of the recent manufacturing expansion in the United States will have workers here building vehicles with higher margins or advanced technologies, such as trucks and SUVs, electric vehicles and self-driving cars. The work that has moved to Mexico — and continues to move to Mexico — is assembling smaller cars that don’t turn as large of a profit and have fallen out of favor with American car buyers.

Source: /
Trump wants to return auto industries to the country.

“I know it doesn’t seem this way but [Trump’s agenda is] very aligned with how we do business. Well, not the tweets, but the subject matter,” said Hinrichs. “We’re the largest manufacturer of vehicles in the United States. We’re one of the largest exporters of vehicles from the United States. So Ford Motor Company is a great example of what this all means and what it could look like.”
Nevertheless, Ford is among the companies that have collided with the president-elect. On the campaign trail, Trump lashed out at Ford for plans to shift production of some cars to plants in Mexico. Trump said then and has repeated since that companies that build in Mexico should pay a tariff on those goods.
Ford then announced it would abandon plans to build a new facility in Mexico and use some of the savings to add jobs in Michigan and build electric vehicles there.
“We made some recent decisions that were driven mostly by what we view future volumes are for small cars, but clearly we said publicly that we took into account expectations around pro-growth policies in the U.S. and what that could mean,” said Hinrichs.
The Mexican plant that Ford halted was slated to build the Ford Focus, which is in less demand now than when that factory was initially planned. The Focus will instead be built at a different, existing facility in Mexico.
So how should companies respond to Trump?
“What we’ve been doing is, first of all, trying to not knee-jerk react and just try to get the facts out there,” Shanks said. “We have been talking with him and his team, both during the campaign and post-campaign. And it’s interesting, at least the feedback we’re getting…is that he seems to be quite a different person when you talk to him one to one. Very thoughtful, listens,[asks] good questions. So I think you just have to not overreact.”
Other auto leaders said that they don’t plan to change course based on Trump’s remarks, at least not yet. GM CEO Mary Barra, an economic adviser to the president-elect, told reporters here that the company would “build where we sell” and push forward with manufacturing in Mexico.
Fiat Chrysler CEO Sergio Marchionne said last week that the company would need to better understand how trade will change under Trump before altering its business plans.
As the Hemet Car Guy, I have faith that positive change is coming this year for the consumer and the automotive industry.

Good Driving
The Hemet Car Guy

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