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What impact will Trump have on the U.S. auto industry?
Source: | Author:demingcn | Published time: 2016-11-30 | 1592 Views | Share:
According to the BusinessInsider website, Trump won the next presidential election by winning in the heart of the United States. And these areas where he won are also seen as the location of the fortress of the U.S. auto industry.
According to the BusinessInsider website, Trump won the next presidential election victory in the heart of the United States. And these areas where he won are also seen as the location of the fortress of the U.S. auto industry. Now, Ohio has also become a Republican territory, but even more alarming is that Michigan has also turned to support Trump.

Mr Trump had crushed some of the leaders in the automotive industry during the election campaign, most notably his dissatisfaction with Mark Fields, the chief executive of Ford Motor Company. Trump criticized Ford Motor Company for manufacturing automobile products in Mexico and for transferring unauthorized domestic corporate credit funds to Mexico.

As U.S. domestic auto sales hit a new record high, the U.S. government's assistance policies and bankruptcy measures against General Motors and Chrysler Automobile Co. in 2009 are no longer being lifted. However, the current development of the auto industry should be regarded as being Obama The government is a very good political legacy.

So what does Trump mean for the U.S. auto industry as the next U.S. president?

First, it is clear that a car manufacturer building a manufacturing plant in Mexico will be a major political issue

In fact, car makers in Mexico are producing cars for the hope of continuing to make small vehicles that do not have much room for profit in the United States, and also hopefully these small vehicles will be retained in the U.S. market where SUVs and crossovers dominate A place. The North American Free Trade Agreement (NAFTA) signed between Mexico and the United States can also provide automobile manufacturers with relatively low labor costs. In North America, Mexico is working to make itself a powerful auto-maker in the future.
 
In the next four years following Trump's presidency, some of the real things that have taken place in North American Free Trade Zones may turn out to be more challenging political issues. However, with the potentially restructuring of the domestic demand structure in the United States and the growing demand for SUV models in some of the global markets, automakers' small-car production in the United States will become a money-losing business.

If these manufacturers can not relocate their production to other locations, they will have to withdraw from the assembly of domestic passenger cars in the United States. The rise in oil prices and consumer buying habits will also result in a series of problems.
 
Trump is no longer over-demanding that Ford pledge not to relocate a factory to Mexico. In his opinion, the plant is just a Lincoln car production plant. And compared with its iconic Ford Maverick (reference, inquiry), the factory produces only a small amount of Lincoln SUV. And this is just the beginning of a controversial issue.

Second, the economic instability may accelerate the decline in cyclical sales

In 2016, sales of domestic cars in the United States remained basically unchanged from the previous year while sales for the full year last year were 17.5 million. Most executives and experts in the automotive industry expect domestic car sales in the United States will continue to grow steadily in 2017.

However, due to the instability in the overall market, coupled with consumer concerns about future prospects, the domestic car demand in the United States will enter a downward cycle that may emerge immediately. If US domestic car sales in the first quarter of 2017 can not be kept in the 16-17 million range, then the downturn in demand from the auto industry will emerge by the summer of next year.

Third, the credit conditions in the auto industry may tighten   

Loans in the car buying and leasing sector have lagged behind, but if Wall Street is optimistic about Trump's future policy of governance, the stock market will rebound in the short term. Taking into account the current employment situation is more adequate, the Fed will also decide to raise interest rates to cool the economy as a whole, and to curb rising inflation. Of course, if there is a recession, the Fed will provide many more room for interest rate cuts.

This overall economic environment plays a role in damping sales in the auto industry. Although other factors such as the low oil price and the highest historical record of the vehicle's average service life still exist, the overall environment will still maintain a relatively high demand for automobiles Long time.


Fourth, automakers may need to be prepared for higher fuel economy standards

The U.S. corporate average fuel economy standard (CAFE) suggests that by 2025, the U.S. government should substantially raise the bar for car manufacturers - all companies must produce cars and trucks that average the Fuel Economy Metrics (MPG) Level. Try to meet the regulatory requirements of the standard.

However, as the pattern of car sales in the U.S. domestic market has changed, from smaller and more fuel-efficient cars to larger trucks and SUVs. As the direction of consumer demand changes substantially, the goals of automakers are also changing. Affected by this, sales of electric vehicles and hybrids began to weaken, a trend that has made it even more difficult for carmakers to produce "compliant" vehicles.

Now the carmaker's manufacturing direction is back in conflict with regulatory standards, and the future Republican-led U.S. government and Congress may be implementing a preference for the auto industry.

Five, electric car in trouble 

Compared to fuel-powered cars, electric cars are relatively expensive and therefore require subsidies from state and federal governments to make their prices more attractive.

Sales of EV products are relatively sluggish compared to gasoline-powered cars and trucks. Therefore, the electric car, the cancellation of car loans and tax relief policy is undoubtedly worse. In fact, the current sales performance of electric vehicles is ultimately supported by government policies. Even a new generation of economy such as Tesla and Chevrolet, long-range mileage (reference, inquiry) electric car is also difficult to avoid. Therefore, the electric car market will not grow without some stimulus-related policies.


Sixth, union organizations in the automotive industry will benefit  

As GM plans to build new carmakers in Mexico will become more difficult, GM, Ford and Fiat Chrysler (FCA) carmakers will be able to expand their production capacity in the United States. The resulting new jobs will strengthen the power of trade unions.

As Ford, GM and Fiat Chrysler need to produce more trucks and SUV models, these jobs are likely to be generated in the Midwest. On the contrary, there may not be too many jobs in the so-called "southern Detroit." Often, car factories in the area are mostly German and Japanese companies, and there are no trade unions. The more important reason is that these foreign car makers are not dominant in the pickup and large SUV segment.

Seven, car manufacturers in the global market profits may decline  

Currently, the world's largest consumer market for automobiles is the United States and China, while the performance of U.S. automakers that establish joint ventures and share profits with Chinese automakers may be affected by changes in policies.

Any sign of trouble between Sino-U.S. Economic relations may affect the sales of U.S. cars. Coupled with this change in the markets, U.S. automakers are at risk if their sales in the United States fall, their demand in the European market remains essentially flat, and their sales in the region fall due to the economic downturn in South America.

Of course, the above ideas have some speculation. But considering that the U.S. auto industry is at a peak of its peak since President Barack Obama's reelection, and now Republicans will be in the White House - their representatives Trump oppose most of the favorable global trade pattern for the automotive industry, There are many unforeseen difficulties for the automotive industry, but it may also ease the regulatory burden on the industry.