HOW PRESIDENT TRUMP WILL CHANGE WHAT YOU DRIVE
Vehicles at this week’s New York Auto Show are bigger, thirstier
President Trump isn’t expected to show up at the New York Auto Show this week, but his presence will be felt with the reveal of every new model.
Many of the cars making their debut at the show are larger and thirstier, reflecting a new era in which the Trump administration may ease gas mile- age targets and slow the adoption of other regulations. The administration says its goal is to put the U.S. auto industry on a solid path and promote American jobs.
To a large extent, Trump can take advantage of a trend that was already in progress in an era of cheap gas — the nation’s transition from cars to crossovers, sport-utility vehicles and pickups. The big losers are smaller cars, which helped the nation save on gas during the Obama administration.
In March, Trump ordered a review of the Obama administration’s stringent fuel economy standards, which force automakers to promote smaller cars or those with fuel-saving technologies such as hybrids, electrics or even hydrogen fuel cells. If the regulations are eased, automak- ers will be freer to concentrate on making the larger cars that Americans want most. That’s good for automakers since those models generally carry higher price tags and are more profitable than small cars or those with advanced fuel-saving technology.
U.S. small-car sales fell 6.2% in 2016 to 2.9 million units, as vehicles such as the Ford Fiesta and Chevrolet Sonic suffered. That represents 16.5% of total industry sales, down from 19.2% in 2012, according to Autodata.
During that same stretch, sales of crossovers and SUVs ballooned from 29.7% of the industry to 38.4%.
Among the big SUV or crossover reveals expected at the New York International Auto Show this week are the Infiniti QX80 Monograph concept, a redesigned Lincoln Navigator and a new Buick Enclave.
“Consumers have made it pretty clear that they prefer crossovers,” AutoPacific analyst Dave Sullivan said.
Although the crossover trend may be unstoppable, the Trump administration will still have the power to shape the direction of the automobile in several ways.
“We are going to ensure that any regulations we have protect and defend your jobs, your factories,” Trump said in March at an event near Detroit, where he ordered the Environmental Protection Agency to review Obama’s corporate average fuel economy (CAFE) standards.
“If the standards threaten auto jobs, then common-sense changes could have — and should have — been made.”
Another factor that directly affects what Americans drive is Trump’s threat to impose a border tax on vehicles imported from Mexico, where most small cars are made but also some larger vehicles such as General Motors’ pickups. That tax could make some vehicles more unaffordable in the U.S.
Here are key questions to pon-
der as the New York International Auto Show gets underway:
Q: How much power does Washington really have over the auto industry?
A: In one respect, it’s significant because the EPA sets fuel economy standards, and Washington can pursue or abandon free-trade agreements that the industry relies upon.
On the other hand, the auto industry is a global sector, and China is its biggest market. General Motors, for example, sells more vehicles in China than it does in the U.S. Design and engineering decisions on global vehicles must take into account all markets.
So don’t expect automakers to suddenly shift strategies in the U.S. since many of the vehicles they sell here must also be sold in other markets. “Other than pickup trucks and minivans, the U.S. market doesn’t get special treatment,” Sullivan said. “We’re really a recipient of whatever happens for the Chinese market now. Even if emissions requirements or other things change, the automakers still have to think about what the other markets are going to need and what’s required to sell vehicles there.” Q: Was Trump’s election a death blow to the small car?
A: Automakers believe they must continue to sell some small cars to entice entry-level buyers or cost-conscious consumers to their brands. However, car buyers can often get similar fuel economy with small crossovers that they previously believed was only available in small cars.
Q: Will automakers pump the brakes on hybrids and electric vehicles if regulations are eased?
A: Possibly. Sales are sluggish, with the exception of Tesla’s luxury electric cars. Even the stalwart Toyota Prius is flagging, as sales plunged 26.1% in 2016.
But there’s a big reason why they might not pull back aggressively. California and 13 other states have a waiver that allows them to set stricter requirements on vehicle emissions, which are tied to fuel economy, than the rest of the nation. Some include the requirement that automakers sell zero-emission vehicles. Unless the Trump administration seeks to withdraw California’s ability to set its own standards — which would likely trigger a legal battle — automakers may continue manufacturing these vehicles to maintain access to the crucial California market.
Still, California and 13 other states have a waiver that allows them to set stricter requirements on vehicle emissions than the rest of the nation.