Howes: Detroit autos face deep uncertainty in Trump’s Washington

Howes: Detroit autos face deep uncertainty in Trump’s Washington
Daniel Howes, The Detroit NewsPublished 11:00 p.m. ET June 17, 2019

Automakers say protracted litigation rules over tailpipe emissions rules effectively would produce two vehicle markets hewing to separate standards within the United States. (Photo: Michael Probst, AP)
Not since two Detroit automakers emerged a decade ago from federally induced bankruptcies, and Ford Motor Co. executed its own restructuring, have the hometown industry and its foreign rivals faced such uncertainty as they do now in President Donald Trump’s Washington.
And such policy flux on tariffs and trade, emissions standards and self-driving vehicle legislation, conjures an F-word that hasn’t been used much in recent years to describe a profitable, recapitalized auto industry managing a fraught transition to its next, high-tech chapter. That word is “fragile.”
Business conditions don’t help, either: softening sales, especially in China, are intensifying market headwinds; auto debt levels are increasing; average transaction prices are rising, pricing once-affordable models out of reach for a growing number of customers. And pressure is on to generate cash to fund investments in next-generation technologies that may — or may not — prove to be the next new thing.
On trade, the president’s multi-front tariff battles with Mexico, Canada, China and the European Union remain mostly unresolved, forcing reappraisals of intricate supply chains, cost implications and financial performance. Trump’s replacement for the North American Free Trade Agreement, a core promise of his 2016 campaign, shows few signs of making it through a Democratic House.
The White House’s fight with California, a dozen coastal states and the District of Columbia is intensifying over proposed rollbacks in Obama-era emissions rules. The last administration and its friends in the environmental lobby assumed higher fuel prices, greater demand for hybrid and electric vehicles and less demand for pickups and SUVs would validate a world view powered by their preferred policy outcomes.
It didn’t work out that way. Seven years on, gas prices are closer to $2 a gallon than $4; trucks and SUVs combined claim their largest share ever of the U.S. vehicle market; and non-traditional powertrains like gas-electric hybrids and battery-electric vehicles are failing to gain traction with a large number of consumers.
Caught in the middle are automakers foreign and domestic, whose first obligation is to profitably produce products real people actually want to buy. Their leaders say protracted litigation over emissions rules effectively would produce two vehicle markets hewing to separate standards within the United States — as industry representatives are sure to argue again this week before the House Energy and Commerce Committee.
That’s why automakers are on-record supporting a “One National Program” for emissions rules: “What works best for consumers, communities and the millions of U.S. employees that work in the auto industry is one national standard that is practical, achievable and consistent across the 50 states,” 17 automakers, including GM and Ford, wrote Trump earlier this month.
“We strongly believe the best path to preserve good auto jobs and keep new vehicles affordable for more Americans is a final rule supported by all parties — including California,” they continued. The “final rule would … include flexibilities that promote advanced technology for the sake of long-term environmental gains and U.S. global competitiveness.”
Essentially, most automakers support what one industry executive describes as a “midpoint” emissions standard that supports innovation and investment in U.S. facilities, that recognizes the unmistakable market shift away from cars toward trucks and SUVs, that delivers year-over-year reductions in greenhouse gasses.
Conspicuously missing from the automakers’ letter is Fiat Chrysler Automobiles NV. A major producer of trucks and SUVs, FCA’s absence effectively allies this town’s No. 3 automaker with Trump’s Environmental Protection Agency and against California and its coastal compatriots — an intellectually honest position that GM and Ford would prefer to avoid.
Better to push for a single standard and reap the potential PR benefit with would-be buyers on the coasts than defy the president by siding with California & Co. The bottom line is that Trump’s ad hoc policy making is a) exhausting and b) reflects a world view that is consistent only in its inconsistency.
Congress isn’t much better. A few years back, U.S. Sen. Gary Peters, D-Bloomfield Township, expressed concern in an interview that the federal government would emerge as an obstacle to development of self-driving vehicles. Without new rules governing their testing and deployment, automakers would be limited in their ability to compete in the Auto 2.0 spaces of mobility, autonomy and electrification — and a new rules package is stuck in Congress.
When Trump took office and business started to get a taste of his chaotic style of governing, then-FCA CEO Sergio Marchionne pointedly said that it was Trump who was elected president and it was the job of business in general and the automakers in particular to adjust. That’s still the case — but it’s not getting any easier.

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