Carmakers shift focus to U.S. after threats by Trump


President-elect Donald Trump is not attending the country’s premier auto show here. But his vow to impose tariffs on imports from Mexico has changed the focus of the show from what new vehicles are on display, to where they are made.

More than anything, said Sergio Marchionne, the chief executive of Fiat Chrysler, the industry needed to know what was going to happen with the North American Free Trade Agreement, which allows for a free flow of trade between the United States and Mexico.

“We need a clear indication of how the U.S. administration plans to deal with NAFTA,” Marchionne said at the auto show. “We’re just waiting for clarity.”

Trump has made the auto industry a frequent target, attacking automakers for selling Mexican-made vehicles in the United States. In response, some automakers have somewhat changed their strategy.

Ford said Monday that it would produce a new pickup and sport utility vehicle in a factory that is losing car production to Mexico. Fiat Chrysler announced Sunday that it would invest $1 billion and create 2,000 jobs in the United States.

After the announcements from Fiat Chrysler and Ford during the auto show, Trump reversed course. He thanked the companies for commitments to add jobs and products at plants in Michigan and Ohio, and took credit for the decisions.

“It’s finally happening,” Trump wrote on Twitter in reference to the job growth, adding, “Thank you Ford & Fiat C!"

What is unclear, though, is where the auto industry will head from this point. And that was a running discussion in the first two days of the sprawling Detroit auto show, which opened on Sunday and is usually known far more for talk about engines than economic policy.

Marchionne, for example, said that although Fiat Chrysler was eager to add jobs and production in the United States, the company was less certain about further investments in Mexico.

“The reality of the Mexican auto industry has been tooled up to try and meet demand in the U.S. market,” he said. “If the U.S. market is not there, its reason for existence is on the line.”

Most major automakers have sizable manufacturing operations in Mexico that export to the United States and elsewhere.

Factories in Mexico are considered an integral part of global business strategies. But Trump has zeroed in on how investment in Mexico may be hurting the chances for U.S. job growth.

Ford, for example, recently canceled plans to build a factory in Mexico, a proposal that had been repeatedly criticized by Trump.

The president-elect also scolded GM for importing small Chevrolet Cruze hatchbacks from Mexico to augment its production of similar vehicles in the United States. But Mary Barra, the company’s chief executive, said it was too late to turn back on that decision.

“This is a long-lead business with high capital investments, decisions that were made two, three and four years ago,” Barra said at an auto show event promoting a new GM SUV.

However, Barra said GM was eager to work with the incoming Trump administration on issues related to manufacturing and job growth.

She said that she had spoken with Trump last week after his Twitter post about the Mexican-made Cruze and that she expected that dialogue to continue.

“There’s a lot of work to do,” Barra said. “When you really look at some of the things the president-elect has said, we have much more in common than we have different.”

Toyota, the Japanese automaker, has also been a recent target of Trump’s. At the show this week, the company is emphasizing the American character of its new cars.

The automaker unveiled a new version of its Camry sedan, which is built at a factory in Georgetown, Kentucky, that employs 7,000 workers. The 2018 model that Toyota showed was sportier looking than previous versions and came with a suite of new safety features designed to stop the car and prevent accidents.

William D. Fay, general manager of the Toyota division, said the new Camry illustrated how much of an American company Toyota had become. Over the last three decades, it has built 10 assembly plants in the United States and has added engineering operations that develop many of the cars and trucks it sells here. The company’s U.S. workforce totals 136,000 people.

The Camry, the top-selling passenger car in the country, “spearheaded our Americanization story,” Fay said. “It is built for Americans by Americans.”

While executives are busy defending their companies’ manufacturing plans in the United States and elsewhere, industry analysts are trying to forecast what effect tariffs or curtailed Mexican production could have on the booming U.S. market.

“Any policy that leads to closing well-functioning plants would be a waste of resources,” said Xavier Mosquet, an analyst with Boston Consulting Group. “Everybody is at full capacity.”

Questions are also being raised about imports into the United States from countries other than Mexico, and whether Trump will consider tariffs on vehicles built in Europe or Asia.

The entire debate is unsettling to automakers, some of which nearly collapsed in the last recession and are now enjoying strong comebacks.

They worry that policies enacted by the Trump administration could put the brakes on the U.S. market, which last year set a second consecutive annual sales record, with 17.55 million vehicles sold.

But despite the president-elect’s disdain for some imported vehicles, some foreign automakers remain keenly interested in breaking into the U.S. market.

At the show on Monday, Guangzhou Automobile Group, one of the largest automakers in China, displayed an SUV that the company hopes to sell in America one day.

The company’s president, Qiujing Wang, said in an interview that its current plans were to enter the U.S. market in 2019.

“We believe the American consumer will be interested in this car because of the styling and driving experience,” he said, adding that the company needed to thoroughly prepare its vehicles to meet U.S. safety regulations.

He expressed more concern that a Chinese-made vehicle would meet quality standards expected by American consumers than that tariffs could penalize imports.

“We believe the trade door will be open to Chinese products,” he said. “And the only condition to entering the U.S. market will be quality.”


Reader Comments ...


Next Up in Politics

Starbucks exec Howard Schultz sure sounds like a 2020 presidential candidate
Starbucks exec Howard Schultz sure sounds like a 2020 presidential candidate

Since announcing in December that he would step down as Starbucks chief executive, there has been speculation that Howard Schultz is eyeing a run for president in 2020. A couple weeks back, I pegged him as the businessperson most likely to win the Democratic nomination.  Well, Howard Schultz sure sounds like a candidate.  Schultz spoke with...
Former Obama officials form group to combat Trump rollback of consumer protections in higher ed
Former Obama officials form group to combat Trump rollback of consumer protections in higher ed

A cadre of attorneys and policy advisers from the Obama administration is teaming up to do what they say Education Secretary Betsy DeVos seems incapable of doing: protecting students.  They have formed a coalition, called the National Student Legal Defense Network, that will partner with state attorneys general and advocacy groups to combat what...
Critics fear Trump’s attacks on Iran could backfire
Critics fear Trump’s attacks on Iran could backfire

President Donald Trump’s bombastic attacks on Iran over the nuclear deal may have created an unanticipated outcome: sympathy for the Iranian government.  Disarmament advocates and other critics of Trump’s approach to Iran say that while his threats to renounce the accord may sit well with conservative allies, they risk damaging the...
Tillerson was startled that Trump told reporters he had made up his mind on Iran deal
Tillerson was startled that Trump told reporters he had made up his mind on Iran deal

With a chatty boss like President Donald Trump, message discipline has not exactly been scrupulously attended within his administration. Especially by the boss himself.  So when Secretary of State Rex Tillerson briefed reporters here Wednesday night following a private meeting with Iranian officials on the sidelines of the United Nations General...
Sanders and Klobuchar will debate healthcare with Cassidy and Graham on CNN
Sanders and Klobuchar will debate healthcare with Cassidy and Graham on CNN

The chief sponsors of the GOP's 11th hour effort to curtail the Affordable Care Act will debate two of their Senate opponents, Sen. Bernie Sanders, I-Vt., and Sen. Amy Klobuchar, D-Minn., on Monday night — an arrangement that surprised some of Sanders's Democratic colleagues, who learned about the debate when host network CNN blasted out a news...
More Stories