Auto Insights: Industry uncertainty after Trump election win

Automotive industry experts are speculating on whether Donald Trump will follow through on his proposed policy changes.

2016-12-01

News and analysis of Donald Trump’s election to The United States of America (U.S.) presidency has dominated the recent media, with widespread speculation of whether Trump will make good on his promised policy changes.

In particular, observers in the automotive industry have been quick to speculate about whether Trump will follow through with his proposal to renegotiate the North American Free Trade Agreement (NAFTA), for the benefit of workers in the U.S. automotive industry.

According to Donald Trump’s ‘7 Point Plan to Rebuild the American Economy by Fighting for Free Trade’, Trump intends to dismantle the agreement, if Mexico and Canada do not agree to better terms in favour of the U.S.

Campaigning on a promise to create 25 million new jobs over the next decade, Trump has focused on the loss of factory jobs and has blamed unfair trade deals as a key cause, particularly with Mexico and China.

Ford Motor Company’s plan to shift the assembly of one of its models from the U.S. to Mexico came under Trump’s scrutiny, resulting in a vow to impose a steep tariff on the car if Ford continued with the relocation. European car-makers are also among those who have in the past benefited from NAFTA, with Volkswagen, Audi, Mercedes-Benz and BMW all now speculating how Trump’s proposed changes may impact their manufacturing operations in Mexico.

This backdrop creates significant uncertainty for the NAFTA partners and as a result, the impact on the automotive manufacturing industry and the flow-on impact of pricing is difficult to predict. Any flow-on impact for the Australian automotive industry will not be known for some time.

This situation serves as a reminder of the significant impact that political and regulatory change can have on all industries, and the Australian automotive industry is no exception, even where proposed changes have not proceeded.

As an example, on a smaller scale, the proposed (and later repealed) changes to Fringe Benefits Tax legislation by the Rudd government rocked the Australian novated leasing industry and caused considerable confusion, resulting in a flurry of pre-emptive activity within the wider automotive industry.

A more current example is the predicted changes to the automotive finance and insurance industry, which the Australian automotive industry continues to monitor with keen interest. In order to be ready to adapt, businesses in the automotive finance and insurance industry will benefit from actively monitoring and planning for any potential adverse change.

If you would like further information, or to talk to one of our advisors, please contact your ShineWing Australia representative today:  

Brett Fowler
Partner,
ShineWing Australia

Clive Bird
Partner,
ShineWing Australia

Rami Eltchelebi
Partner,
ShineWing Australia

Steven Edmonds
Associate Director,
ShineWing Australia

Luke Fernandes
Senior Manager,
ShineWing Australia