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

CNN’s Tapper has emerged as a staunch defender of facts in Trump era. So why is he writing fiction?
CNN’s Tapper has emerged as a staunch defender of facts in Trump era. So why is he writing fiction?

Jake Tapper doesn’t seem to get rattled easily. He’s got a TV anchor’s unflappable poise and immovable hair, and radiates an almost eerie calm when a dozen explosive stories break during his daily CNN show. He’s weathered relentless online attacks from the right for his interrogations of Trump administration officials, and seemed...
Swamped by flood, stung by theft, tiny Martindale rebounds
Swamped by flood, stung by theft, tiny Martindale rebounds

For the small, rural Caldwell County town of Martindale, the news last April that its bookkeeper, whom City Council members failed to vet, had stolen more than $20,000 from city coffers was something of a wake-up call. One year later, the city has instated several ethics and due diligence policies, hired a professional, bonded certified public accountant...
Austin City Council to examine if land-use board’s roster is illegal
Austin City Council to examine if land-use board’s roster is illegal

An influential land-use commission will come under scrutiny by the Austin City Council on Thursday after groups, including the NAACP, have called the composition of the board illegal because too many members are tied to real estate businesses. Since 1994, Austin’s charter has limited the makeup of the Planning Commission to no more than one-third...
Travis County opioid drug overdoses on the rise, 2006-16 data show
Travis County opioid drug overdoses on the rise, 2006-16 data show

The rate of opioid overdose deaths in Travis County, including those from heroin and prescription pain medication, nearly doubled from 2006 to 2016, according to data released by the Austin Public Health Department. In 2006, Travis County averaged four deaths per 100,000 residents. The rated jumped to 7.5 deaths per 100,000 residents in 2016. The figures...
Kris Kobach, once the face of Trump’s voter fraud panel, is held in contempt
Kris Kobach, once the face of Trump’s voter fraud panel, is held in contempt

Kris W. Kobach, the secretary of state of Kansas and face of the Trump administration’s efforts to clamp down on supposed voter fraud, was found by a federal judge on Wednesday to have disobeyed orders to notify thousands of Kansans in 2016 that they were registered to vote.  Kobach, who served last year as the vice chairman of the Trump...
More Stories