Last week's election of Donald Trump this already great country's next President caught may off-guard, including, apparently, Donald Trump. While neither he nor his team may not be prepared for office, which certainly means they don't have any solid plans for how to deal with the automotive industry, we can make some rough inferences based on his rhetoric throughout the campaign. Since deciding to write this column last week, others have beaten me to the punch in getting published, so I'll address some of their concerns as well, but in a slightly different format. Bearing in mind that nothing has been decided, so this is all purely speculation, here's what I think we enthusiasts can expect from President Trump.
What Will Probably Happen
Federal Emissions Standard Relaxation
Trump has made no secret about his feelings that global warming is a conspiracy executed by the Chinese in order to mess with U.S. companies and harm our manufacturing sector. He has also directly addressed emissions, as well as committed himself to crawling out of the Paris Climate Agreement, as well as gut the EPA, leaving the door wide open for new regulations that allow more emissions from both companies and cars. Although this is scientifically and logically stupid, it ultimately won't have much of an impact on the automotive industry.
The fact is, twelve states require vehicles sold there to adhere to the California Air Resources Board's (CARB) standards, which exceed those of the federal government. Since California itself is the world's sixth largest economy, most car manufacturers would be loathe to miss out on that market by designing vehicles with higher emissions than CARB allows. It costs more to make different versions of the same car, especially when we're talking about engineering and engine tuning, and cars are already manufactured to a standard higher than federal regulations require. The frustration with relaxed emissions is that the greatest motor vehicle emissions perpetrators - long haul tractor trailers - will likely continue to go unregulated and continue to "roll coal" across our nation's roads.
Gas Prices Stay Low
"Drill baby, drill" may have been Sarah Palin's catchphrase, but I think you can expect something similar from Trump, whose isolationist policies will probably extend to energy generation. We know he's a friend of coal and in favour of the Alberta gas pipeline, so it stands to reason that he will grant companies the right to explore for more oil domestically. This increased supply would maintain the low prices we're seeing now, which will be great for road trips, but apply little pressure for consumers to want to invest in hybrids or EVs. To that point...
SUV Sales Stay High
As we see every time gas prices drop, SUV sales spike because peoples' memories are like those of goldfish. Crossovers have been slowly killing off the midsize family sedan, even as those sedans get more efficient and more spacious and that trend looks set to continue if gas prices stay low. Plus, many of these larger vehicles are produced domestically, which could be favored under Trump's plan of increased reliance on domestic manufacturing.
What Might Happen
Although all of this is speculative, some potential affects seem less certain, partially because of their potentially disastrous impact on the economy, partially because of wishful thinking.
Small Car Prices Shoot Up
Another concern is that new tariffs proposed against foreign goods could drastically increase the cost of small cars produced in Mexico, potentially making a Ford Fiesta around the same price as a Jeep Cherokee or Mazda CX5 (until the Mazda is also subject to tariffs). This and other anti-import measures intended to encourage the growth of domestic production could not only reduce sales domestically as small cars become unaffordable for the consumers most likely to buy them, it could also lead to job losses as our trade partners introduce tariffs on our products, resulting in a sales slump that idles production. In a global economy, everyone loses when one partner starts to get more selfish and the world will face a recession if Trump's suggested actions actually take place.
Car Sales Increase
Over the past few months, new car sales have stagnated as some outlets suggest that the U.S. has reached "peak car." This is undoubtedly due to several factors, including increased reliability of existing cars, decreased reliance on vehicles to get around when living an urban lifestyle (as many millennials will choose) and increasing price of new vehicles coupling with increased student debt, making them unaffordable to younger demographics. As Boomers start to pass on and Gen Y become more of a priority in terms of attracting new car buyers, something will have to give, whether it's loan forgiveness or price reductions. We're already seeing generous incentives on certain new cars, which have helped, albeit minimally. Trump's plan to cut taxes and also forgive student debt (granted, after 15 years, which would produce impacts far beyond the end of his four year term), could help reinvigorate a lagging market and inspire more individuals to get out there and hit the road with their new riches in a brand new ride.
Vehicle Import Age Drops
An opponent of regulations, Trump will likely curry favor from automotive enthusiasts who have a particular regulation they hate the most. That is, of course, the requirement that cars be 25 years old before they are eligible for legal import to the U.S. We're approaching the glory years of the 90s, when many enthusiasts' favorite vehicles outside the states first went on sale, but each year is an agonizing amount of time to wait just to "unlock" a new model for import. Trump's presidency, combined with a Republican House and Senate could mean the best chance for enthusiasts to introduce and pass legislation reducing the import age from 25 to 15 years, as has long been the goal. Someone want to take the lead on starting a petition?
What Won't Happen
A lot can happen in four years, but in the automotive world, that's frequently less than one product cycle, and there are several areas that, no matter what happens, Trump will not be able to affect.
EV Regression
Even with low gas prices and reduced federal emissions standards, the Electric Vehicle train has left the station and isn't going to be stopped by such forces, which is great news for both enthusiasts and the environment. Just as we saw with the recent Jaguar i-Pace reveal, progress will not be halted, as there is too much to gain from selling EVs worldwide, like in Germany, whose goal is to eliminate Internal Combustion Engine vehicle sales by 2030. Tesla might not meet any of its production goals and the new Chevy Bolt might not find as many homes as GM would hope, but there has been irreversible progress in EVs under Obama's tenure (whether or not he is responsible) and that will keep on chugging.
New Regulations on Autonomous Cars
Much like with import age, Trump's hatred of regulations could have an impact on autonomous cars. Which is to say he won't do anything about them, potentially opening the door to competing standards, consumer confusion and later adoption of a technology that could not only save lives but eliminate terrible, awful, no-good drives. Companies will continue to pursue self-driving vehicles on their own, but without a uniform standard of either operation or communications, we could end up seeing millions of dollars invested in technologies that are scrapped once a new president takes office and starts to impose standardization on an industry where all players are striving to have their own systems out first, rather than striving to meet a common goal. These losses could end up, again, costing companies jobs in the long run.
Long Haul Trucking Reform
As I mentioned in the emissions relaxation section, long haul trucking, which has been tipped as the industry ripest for regulation and job reduction in favor of autonomous technology, will likely carry on exactly as it has. There may be no new jobs created here, but jobs will not be eliminated in favor of self-driving tech at the same rate as if a progressive candidate had won. This has negative implications for traffic deaths and emissions, not to mention clogging the roadways with drivers when autonomous trucks could drive throughout the night when the rest of us sleep. The silver lining is that the truck driving profession - the most popular profession in 29 states - is not going away, so thousands will keep their jobs. At least until foreign manufacturers stop shipping their products to the US because of import tariffs, meaning less material for the truckers to transport. The bright side is that several companies are already trialing autonomous trucking journeys without regulation, and hopefully this will catch on among more common routes.
Manufacturing Jobs Return
Oh, the irony. For all his promises to bring the jobs back, the one thing Donald Trump will almost certainly be unable to do is bring back auto manufacturing jobs. Whether by robot or by less expensive labor in other countries, American laborers have been losing these jobs for more than 20 years, and no amount of import tariff is going to correct what globalization has caused. Contrary to what his supporters may believe, companies do not merely send jobs to other countries or assign them to robots because they hate American workers (even if they deserve it), but rather because it's less expensive, and they need to reduce costs in order to produce a product that consumers can afford and will be willing to pay for. If he implements restrictions on trade and causes all cars produced outside the U.S. to have 30% added to their price tag, the only harm he is bringing is to American consumers. Ford, which is retooling its small car factory in Michigan to produce future Rangers and Broncos, will not suddenly decide to build a factory in Tennessee to produce Fiestas and Foci solely for the American market to avoid tariffs. They will just sell prohibitively expensive small cars until the next president comes in and reverses the damage done.
Ultimately, it's not the auto companies' fault that automotive manufacturing jobs are in decline. In order to compete with manufacturers who produce their cars elsewhere, the big three have to compete on the same playing field, which means reducing costs through outsourcing or automation. It's also not Trump's fault that he won't be able to bring them back. One man alone cannot reverse the effects of globalization, no matter what he says on the campaign trail, and most people are smart enough to know that politicians lie, or perhaps in Trump's case, just have no idea what they're talking about. It's not the fault of the American laborers either, but the onus is going to have to be on them to educate themselves and identify other ways to apply their skills or gain new skills that make them more attractive for other employers. Hey, I hear Tesla will need roofers soon!
So that's my take, based on what I have read about the Donald's policies and my experience in the auto industry. Some things will change, some won't, but I think there's no reason to dread the next four years in the automotive sense. At least that provides us some light at the end of what can otherwise seem like a long, dark tunnel.
Authored by
Devlin RiggsT