Detroit auto show comes amid uncertain Trump future

5 min

Chicago (AFP)

The automotive world descends on Detroit this weekend for the annual auto show, which will highlight rapidly-evolving technology, but comes amid an uncertain climate following Donald Trump's public tussles with US car makers.

The 29th edition of the show, held in the American car capital, will showcase the increasingly prominent role of digital and electric advances, starting with its unofficial kickoff on Sunday, when Google will showcase a self-driving car partnership with Chrysler.

While the show will be looking to the future, prior to the show's public opening on January 14 many industry insiders likely will be focused on the present, notably the increased uncertainty from an incoming Trump administration.

The president-elect has shown a willingness to apply pressure, especially via Twitter, on US manufacturers like Boeing, Carrier, Lockheed, GM and Ford to criticize corporate strategies, especially those involving investment and employment outside the United States.

He has vowed to preserve American jobs or bring them back, threatened to impose tariffs on American goods made in Mexico and China, and tear up the North American Free Trade Agreement with Canada and Mexico.

- NAFTA and the US economy -

"We've never experienced anything quite like this," said Alan Deardorff, a professor at the University of Michigan who focuses on international trade policy.

Trade deals take years to have an effect as economies adjust, he said, so it is unclear what would happen to the US car industry should those deals be abruptly canceled or changed.

"We've never gone in this direction, not in recent history," he said.

But he warned one likely outcome is an increase in the car prices, making them less competitive in a global economy.

Matt DeLorenzo, who tracks the auto industry for Kelley Blue Book, said US carmakers "will have to reassess their whole Mexico strategy and NAFTA."

An early sign of that reassessment came in dramatic fashion Tuesday when Ford appeared to capitulate to months of Trump's criticism by scrapping plans to build a $1.6 billion plant in Mexico.

Instead it will use $700 million of those funds to expand a Michigan plant, creating 700 new jobs.

"It's literally a vote of confidence around some of the pro-growth policies that (Trump) has been outlining and that's why we're making this decision to invest here in the US," Ford CEO Mark Fields said.

Ford has been investing in high-tech, electric vehicle development, and beefing up higher-skilled American manufacturing can help better accomplish that goal, while its cheaper, less technology-laden car models are produced in Mexico.

Trump also targeted GM in a tweet Tuesday, threatening to impose a tariff on the car giant's Mexican-made Chevrolet Cruze cars. GM responded quickly, emphasizing that the vast majority of its US-sold Cruze vehicles are made in Ohio.

Despite the rhetoric, the worst fears of what a Trump administration might do in 2017 are unlikely to come to pass, said Christopher Wilson, who studies US-Mexico policy at the Wilson Center, a Washington think tank.

"The incoming administration is coming to terms with the reality" of the cross-border car manufacturing process, Wilson said.

He warned that there may be other efforts undertaken to address negative effects from globalization, including new tax policies and a renegotiation of NAFTA.

"Anything that puts NAFTA at risk, puts the US economy at risk," he said.

- Full automation? Not yet -

With those high stakes in play, the auto industry will open the Detroit auto show that this year focuses on autonomous car technologies, amid the usual array of vehicle debuts and demonstrations.

The bulk of the show's more than 300 exhibitors are start-ups boasting new technologies for connected and self-driving cars.

Major manufacturers also are in the game.

Volkswagen, seeking to turn the page from the diesel emissions scandal that led to a 7.6 percent sales tumble in 2016, plans to unveil an electric, autonomous concept car.

Google's self-driving car subsidiary Waymo will showcase a Chrysler Pacifica minivan outfitted with self-driving technology.

"The race has accelerated in the last 12 months between car groups, Silicon Valley giants and consumer electronics groups to be the first in market" with an autonomous car, said Karl Brauer of Kelley Blue Book.

Despite that onslaught, analysts say autonomous technology is currently in the early stages, in which human intervention is still required.

"Full automation is the ultimate goal, but at the moment, no company has fully autonomous vehicles in production," Jefferies & Co. tech analyst Brian Fitzgerald said.

Michelle Krebs, an industry analyst with AutoTrader, said part of the challenge is overcoming hesitant consumer sentiment, which has been evolving from suspicious to cautious.

"There's going to be a lot of experimentation ... in terms of how do we make autonomous available to consumers," Krebs said.

An AutoTrader annual survey of consumer sentiment found shifting attitudes. After initially considering autonomous technologies too dangerous, consumers were becoming more accepting, Krebs said.

"Consumers want more and more driver assist technology," she said, "and they are warming up to the idea of autonomous, fully self-driving" cars.

The production of these technology-packed cars will require a highly-skilled workforce.

Robert Scott of the Economic Policy Institute said that is an opportunity for American manufacturing to catch up, should policymakers in the Trump administration take steps to invest in labor force training and other services for displaced workers.

"They're going to have to do more than renegotiate NAFTA," to bring manufacturing jobs back at a large scale, Scott said.