The News
Western automakers have braced for increased turmoil after US President-elect Donald Trump returns to the White House in January. The president-elect has pledged to raise tariffs on goods coming into the US, including 25% on goods from Mexico, where many US and European carmakers have facilities.
A recent S&P report found that US and European carmakers could lose up to 17% of profits under Trump’s trade plan. Already, protectionist US and European measures to curb the sale of China-made cars have had global repercussions, with once strong Japanese automakers acutely exposed to Chinese competition.
Many automakers are still betting electric vehicles could pull their struggling businesses through, but sluggish demand could require government intervention, which Trump may be unlikely to give.
SIGNALS
US automakers prepare for Trump policy aftershocks beyond trade
US automakers are preparing to rally against President-elect Donald Trump’s expected move to ditch Biden administration rules that compelled them to sell EVs. While Detroit was not necessarily in favor of Biden’s regulations, automakers have invested billions into the EV transition, and scrapping the regulations could hurt the “backbone” of the US economy and an industry that employs more than a million people, The New York Times reported. Executives are also worried about Trump’s mass deportation plans, which could lead to labor shortages. “It is unrealistic to believe that our economy would improve without this workforce,” one executive wrote for Automotive News.
European Union could take ‘Europe first’ approach to bolster industry
In Europe, the auto sector “has become the totem for Europe’s flagging industry” amid slowing global demand and a broader transition to Chinese vehicles, the Financial Times wrote, with President-elect Donald Trump’s expected tariffs likely to only exacerbate the crisis. Germany’s stricken auto industry — which faces massive layoffs and strikes — would be further damaged by such tariffs, while smaller countries like Slovakia, where 74% of auto exports are sent to the US, will be “acutely exposed,” according to CNBC. To boost European Union demand, the bloc’s chief industrial strategist proposed a “Europe first” approach to bolster EV infrastructure and heavily subsidize European-made cars, as well as building up a second-hand EV market to lower costs for consumers.
China chips away at Japanese automakers in Asian markets
Japan’s auto industry has started to struggle as China chips away at Japan’s dominance over some Asian markets, particularly in Southeast Asia, Bloomberg reported. In Thailand and Singapore, sales of Japanese cars have declined by up to 18% as Chinese automakers expand there in the face of heightened US and European trade duties. In Indonesia, Bloomberg noted, “Nissans are now almost an endangered species,” with Chinese brand BYD already ranking high in global car sales to the region just months after delivering its first cars to the country. Japanese automakers are investing in new technologies to try and reclaim their edge, including battery technology that could make hybrid vehicles more attractive, especially in regions with little EV infrastructure.