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Automakers put on a show in Detroit as policy storms loom in DC

Ryan Beene and John Lippert, Bloomberg News on

Published in Automotive News

WASHINGTON -- New models soaked up the spotlight at the Detroit auto show this week but policy decisions coming from Washington in 2018 may do more to determine the health of the industry than anything since the industry's U.S. bailout 10 years ago.

Pending federal government actions -- from a possible North American Free Trade Agreement withdrawal to rolling back vehicle efficiency rules and enacting regulations paving the way for driverless cars -- stand to impact the auto industry for years to come.

"I think this is going to be the most important public policy year since 2008," for the auto industry, said Congresswoman Debbie Dingell, a Michigan Democrat and former General Motors Co. executive.

In that year, President George W. Bush, a Republican, gave GM and Chrysler emergency loans in to keep them alive long enough for Barack Obama, a Democrat, to craft the $80 billion rescue plan that included the 2009 firing of GM Chief Executive Officer Rick Wagoner and the managed bankruptcy of both carmakers.

A long list of uncertainties comes as U.S. automakers are vying to maintain heady sales and profits while demand is beginning to stall following 7 years of sales growth. Policy outcomes will be a big factor in whether the industry achieves that objective, John Bozzella, CEO of the Association of Global Automakers, a trade group for for mostly Asia-based automakers in the U.S.

'Regulatory Shock'

 

"We have been on a roll," Bozzella said. "A regulatory shock could certainly set us back, and I'm concerned that a withdrawal from NAFTA could be just that kind of shock."

Entrenched supply chains carrying billions of dollars in parts, engines and cars freely between the U.S., Canada and Mexico will be disrupted if President Donald Trump follows through on threats to withdraw from NAFTA.

The Trump administration has proposed dramatic changes to NAFTA's auto industry rules in a bid to bring more production jobs back to the U.S. Canada and Mexico have balked at the proposals, prompting concerns that Trump may withdraw from the agreement.

Jim Lentz, Toyota Motor Corp.'s CEO for North America, warned the fallout of withdraw could undermine the competitiveness of U.S. vehicle exports, noting that since the pact took effect some 14 auto plants have been built in the U.S. compared to 11 new factories in Mexico.

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