The North American International Auto Show is geared to show off the latest and greatest in automotive technology every year. But some experts say this year’s gathering in Detroit has been decidedly light on fluff and more down to business. (Jan. 10)
DETROIT — The glitzy Detroit auto show is typically a beauty contest for new cars — but this year it’s become a bragging contest to see who’s the most made-in-the-USA auto manufacturer.
Automakers are practically tripping over themselves to show off their American factories following tweeted jabs by President-elect Donald Trump at automakers that assemble vehicles in Mexico to sell in the U.S.
There’s a lot at stake. As Trump threatens a 35% tax on imported vehicles, which would require extracting the U.S. from the North American Free Trade Agreement, auto-industry executives are fretting that their major investments in Mexico could suddenly be in jeopardy.
In some cases, automakers proactively trumpeted their U.S. investments at press conferences and in interviews at the Detroit auto show. In all cases, they’re well prepared to share statistics about their commitment to America, in addition to the claims:
• General Motors. “We have the highest domestic content” of any automaker and have made $11 billion in U.S. investments over the last two years, GM CEO Mary Barra told reporters.
• Ford Motor. “We are the largest employer of hourly automotive workers in the U.S.,” Ford CEO Mark Fields said in an interview. Last week, Fields announced the company canceled plans to build a $1.6-billion plant in Mexico.
• Fiat Chrysler. The third of Detroit’s Big 3 automakers earned a laudatory tweet from Trump after announcing an expansion of a pair of plants and plans to hire 2,000.
• Toyota. Japan’s largest automaker has made “more than 25 million vehicles in the U.S. over the past 30 years, which honestly never ceases to amaze me,” Toyota CEO Akio Toyoda said at a news conference. Toyota said it would invest $10 billion over the next five years in U.S. operations.
• Volkswagen. The German automaking giant noted its recent $1 billion investment in its Chattanooga, Tenn., plant to manufacture the new VW Atlas sport-utility vehicle.
“We are a very strong, invested, good corporate citizen in the United States,” VW North America CEO Hinrich Woebcken told reporters.
• Honda. President Takahiro Hachigo opened the Japanese automaker’s news conference by noting that 2017 is the 40th anniversary of Honda’s announcement of its first American plant. The automaker has 12 factories in the U.S.
“We made this decision based on our commitment to make our products close to our customers,” Hachigo said.
Jeffrey Conrad, Honda senior vice president and general manager, downplayed the political dynamics of those investment decisions but acknowledged that the impact of the Trump administration on the auto industry is the No. 1 question issue discussed at the show. “The reality is, we have a president that hasn’t gone through an inauguration yet. Everything truly is speculation,” Conrad said. “We are going to look, wait and see, and we will react accordingly.”
Many of automaker’s pronouncements cover investment announcements that were already in the works. They raise questions about whether executives are playing a publicity game in hopes of halting momentum for import taxes, which could have a devastating effect.
“The repercussions would be tremendous,” said Tom Webb, chief economist for Cox Automotive, which offers services to dealers and consumers. “You’re talking about a tremendous falloff in terms of their basic corporate structure.”
Barring any significant policy changes, the Center for Automotive Research projects that U.S. share of North American automotive production will fall to 58% by 2020, down from the previous all-time low of 63% last year. That’s in part because Mexican automotive labor costs remain 80% lower than American labor, although higher expenses for security and transportation erode the savings gap. Most automakers have moved production of small cars to Mexico because they can’t make them profitably in the U.S.
A 35% tariff would eliminate the savings of manufacturing in Mexico, Ford Chief Financial Officer Bob Shanks said. “It’s not even close,” he said.
What’s unclear is how the auto industry would handle the extra costs of a tariff.
The average Kentucky-assembled Toyota Camry would cost an extra $1,000 to manufacture because about 25% of its components are imported, Toyota North America CEO Jim Lentz said in an interview.
“I understand what the president-elect is saying — he’s basically saying that we want to have a vibrant economy, that we want to be more competitive in the world,” Lentz said. “There will be some winners and there will be some losers, and the automotive sector would be a loser.”
Some believe cars would get more expensive as automakers compensate. But Barclays analyst Brian Johnson said in a research note that there’s “likely little ability” for manufacturers to pass costs along to consumers in the form of higher prices because shoppers “are fairly price sensitive.”
Ford and GM are particularly well positioned to weather a trade storm in North America because of their substantial U.S. operations. But Toyota, Nissan and Hyundai each import about half of their U.S.-sold vehicles, while Mercedes-Benz and BMW “import the most into the U.S.” despite exports from their American factories to foreign markets, Johnson noted.
More from the Detroit Auto Show:
Volvo unveiled the 2018 XC90 Drive Me at the Detroit auto show to pursue autonomous driving.
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A life-size model of the four-wheeled character Lightning McQueen from Disney’s Pixar’s Cars made its debut at the North American International Auto Show in Detroit.
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Volkwagen’s concept microbus I.D. Buzz combines looks of VW’s 60s icon microbus minivan. The vehicle was revealed during the 2017 North American International Auto Show at Cobo Center in Detroit.
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Toyota reveals the 2017 Camry XSE on Tuesday, Jan. 10, 2017 during the 2017 North American International Auto Show at Cobo Center in Detroit.
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GM’s Chevrolet Bolt was named North American Car of the Year. It’s the first U.S. made, mass-market, fully electric car and has a range-per-charge of 238 miles.
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Exciting new cars seen at the Detroit Auto Show this year, a lot of speed, self driving technology, and a visit from Lightning McQueen.
Video provided by TheStreet
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Audi reveals the Q8 luxury concept SUV on Monday, Jan. 9, 2017 during the 2017 North American International Auto Show at Cobo Center in Detroit.
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Nissan reveals the 2017 Nissan Rogue Sport on Sunday, Jan. 8, 2017 during the 2017 North American International Auto Show at Cobo Center in Detroit.
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The second best-selling minivan gets a facelift and tons of new tech for 2018.
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GMC reveals the 2018 Terrain SUV during the 2017 North American International Auto Show in Detroit.
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Volkswagen reveals the 2017 Tiguan Sunday, Jan. 8, 2017 during the 2017 North American International Auto Show at Cobo Center in Detroit.
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Waymo, Google’s self-driving car division, will start testing its new fleet of minivans on public roads in California and Arizona later this month, Waymo CEO John Krafcik revealed in a speech at the Detroit auto show Sunday. (Jan. 9)
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Bentley reveals the jaw-dropping specifications about its luxury Continental Supersports vehicle, debuting at Detroit’s North American International Auto Show.
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Hundreds of guests paid $500 each to mingle with some of the world’s most exclusive luxury cars during the annual Gallery event in Detroit that kicks off the city’s auto show (Jan. 8)
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Opinions are mixed at this year’s North American International Auto Show in Detroit over whether President-elect Donald Trump and his proposed policies will benefit or hurt the auto industry. (Jan. 9)
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Last VideoNext Video
Volvo unveils 2018 XC90 Drive Me, self-driving car program
Life-size Lightning McQueen of ‘Cars 3’ makes debut
Volkswagen reveals I.D. Buzz concept microbus
Toyota unveils 2017 Camry XSE
GM’s Chevrolet Bolt named North American Car of the Year
Interesting new cars at the 2017 Detroit auto show
Audi unveils latest Q8 luxury concept SUV
Nissan introduces 2017 Rogue Sport
2018 Honda Odyssey is unveiled
GMC unveils 2018 Terrain SUV
Volkswagen unveils 2017 Tiguan
Waymo Self-Driving Minivan Starting Test Drives
Bentley reveals its 209-mph, ‘most powerful’ car ever
Ultra-luxury cars on display at Detroit soiree
Feelings toward Trump mixed at Detroit Auto Show
Contributing: Detroit Free Press reporter Brent Snavely
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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