Donald Trump was officially sworn into office on January 20. He now goes by President Trump and with the new title, comes a lot of power. Automakers are fully aware of that newfound power and have long been paying close attention to what Trump has had to say about the auto industry for that reason.
We previously reported on Trump’s feud with Ford. Trump targeted Ford throughout his campaign over its prior plans to invest $1.6 billion in expanding production of small cars in Mexico. The company said it was doing so to further increase its competiveness. That money was going to be used to build a new plant in San Luis Potosi, Mexico. But after Trump repeatedly called on Ford to change those plans, the company announced it was doing just that. Instead of investing that money in Mexico, Ford announced it was expanding its Flat Rock, Michigan facility. That factory will build high-tech autonomous and electric vehicles as well as the Mustang and Lincoln Continental, creating 700 direct new jobs.
Ford isn’t the only company to fall into Trump’s direct line of fire. He has repeatedly threatened to impose a border tax of 35 percent on vehicles imported by any automaker to the U.S. market. Most recently, BMW, Daimler and Volkswagen were criticized by the new president.
“If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35 percent tax,” Reuters reports Trump said in an interview with German newspaper Bild. "I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that," said Trump.
Despite the threat, BMW told reporters that it was sticking to its plan to open a factory in the same location Ford was planning to. An executive said the company will invest around $1 billion in a new plant in San Luis Potosi. The factory is set to build the BMW 3 Series beginning in 2019. The company says the investment will create at least 1,500 jobs.
While BMW is holding its ground, one thing is clear: Trump won’t let up. That’s why Motor Trend magazine set out to interview the top executives of several automakers at the North American International Auto Show in Detroit. Here’s a look at what some of them had to say.
Ford Motor Company
A good place to start is with Ford’s response to questions about Trump. When the Motor Trend team asked executive chairman Bill Ford about the company canceling its plans to build the Mexican plant, Ford said the move wasn’t dictated by Trump.
“We made that decision,” Ford told Motor Trend. “It was the right business decision. We will always make the right business decision for Ford. But it’s important that we inform him [Trump] of that. We understand his policies and where he is going.”
Ford added that he has frequent conversations with Trump and that he’s pleased with how easy the president is to talk to.
Fiat Chrysler Automobiles
When Fiat Chrysler Automobiles CEO Sergio Marchionne was asked about his position on Trump’s tariff threats, he said the company will adjust if need be. He said that the company’s $1 billion plan to retool U.S. plants could come in handy for that reason. That’s because the investment makes it possible for Ram heavy duty pickup production to move from Mexico to FCA’s plant in Warren, Michigan if need be.
“We had no way to do it until Warren was free. Now we can adjust,” said Marchionne.
Marchionne also said that the plan was in the works long before Trump began making his threats.
General Motors
General Motors is yet another company that has faced criticism from Trump. The president came down on GM, claiming it was selling Mexican-made Chevrolet Cruze vehicles in the United States. GM responded by saying all of its Chevrolet Cruze sedans sold in the U.S. are built in Ohio. It says Chevrolet Cruze hatchbacks made in Mexico are sold in other markets. Despite facing criticism, GM executives seem to remain positive about Trump.
“I think he’s a business person obviously. He understands, I think, the desire to provide return to shareholders and employ people to do that and make great products, to be successful doing that,” Mark Reuss, of GM, told Motor Trend. “I do believe that he understands all that. I don’t think that’s a bad thing at all. I think that’s a good thing.”
Toyota Motor North America
Toyota Motor North America has also faced criticism from Trump over its new Corolla plant in Guanajuato, Mexico. Motor Trend asked CEO Jim Lentz about that and what he expects from further interactions with Trump.
“What we’re trying to make clear is that it’s difficult to look at one plant in Mexico in isolation from everything else that we do,” Lentz told Motor Trend. “In the U.S., we’ve invested $22 billion over the past 60 years. Over the next five years, we will invest $10 billion dollars, just in the U.S.”
Lentz also spoke to how much the cost of its Corolla could go up if the company had to build the vehicle in the U.S. or face a border tax.
“We calculate that it’s going to be a $1,000 increase in cost on that car,” Lentz told Motor Trend. “If that’s kind of the baseline, imagine what that’s going to do to the average car. If we just jacked up the cost of the car, it’s difficult to push that on to the consumer. So everybody is going to have to adjust the model mix and adjust the overall volume of the industry. I worry about the unintended consequence of that: The industry drops, we cut production, and employment goes down.”
Our Take
It’s certainly interesting to hear what top auto industry executives think about President Trump and what’s to come. Clearly, they have differing opinions. While some are remaining positive others seem a bit worried. One thing’s for sure. Now that Trump has assumed office, they’ll be paying even closer attention to what he has to say.
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