Detroit auto show kicks off with trade plea for Trump

4 min

Detroit (AFP)

The Detroit auto show opened Monday with a plea for free trade from the German auto industry while President-elect Donald Trump hailed announcements of new US investments by automakers.

Trump, who has threatened and singled out for scorn automakers seeking to sell Mexican-built cars on the US market, cast a long shadow over the 29th annual US auto showcase.

The president-elect ran a campaign that blasted the North American Free Trade Agreement and other trade deals and has made blackballing companies that outsource operations to Mexico a rallying cry ahead of his January 20 inauguration.

Trump has threatened to impose tariffs on Mexican-built cars imported into the US market, even while business groups have warned that such a move could stoke a job-killing trade war.

Representatives of the German Automotive Industry Association on Monday lent their voice to the free-trade mantra, urging the president-elect to keep international commerce alive.

"Cooperation and accessible markets, free trade and direct investments are two sides of the same coin, bringing prosperity and jobs to people on both sides of the Atlantic," said Matthias Wissmann, president of the group, which is known in Germany as VDA.

German auto companies have quadrupled their production in the US to 850,000 from 214,000 since 2009, said Wissmann, whose group represents Daimler, BMW and Volkswagen.

German auto companies directly employ about 110,000 in the US, he said.

But German automakers, like their counterparts from the US and Japan, are finding themselves having to adapt to new rules of engagement in the Trump era.

On Sunday night, Volkswagen head of brands Herbert Diess said the company planned to keep manufacturing in Mexico. But he also emphasized that the German company could expand its capacity at its Chattanooga, Tennessee plant where it already employs up to 3,200 people. VW also plans to build electric vehicles in the United States.

Volkswagen is still struggling to move past an emission-cheating scandal. Over the weekend, FBI agents arrested former VW executive Oliver Schmidt, who faces charges that he knowingly lied to US regulators.

Schmidt will be arraigned on Monday in a Miami court, a US Justice Department spokesman said.

- Trump touts Fiat move -

After months as a target of Trump criticism, Ford last week reversed plans to open a new $1.6 billion factory in San Luis Potosi, Mexico and instead will invest $700 million over the next four years to expand its plant in Flat Rock, Michigan to build electric and self-driving vehicles.

And just Sunday, Fiat Chrysler announced it was creating 2,000 jobs in the United States, investing $1 billion in factories in Ohio and Michigan, two key states to Trump's election victory. That move came just days after Trump lambasted Toyota in yet another tweet.

"It's finally happening - Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2,000 jobs," Trump boasted on Twitter.

Swedish automaker Volvo also signaled it plans more investment in the US market. Volvo, whose biggest shareholder is Chinese, plans to begin production on a second generation S60 mid-size sedan in 2018, Volvo CEO Hakan Samuelsson said.

Production from that factory largely will be of cars that can be exported, which is the practice of other German automakers with US operations. Half the German cars produced in the US are exported, with about a quarter going to Europe and a quarter to Asia, according to VDA.

Wissmann expressed hope Trump would embrace the role foreign automakers play in the US.

"We assume that the new administration will aim to strengthen US industry," Wissmann said.

"This industry includes many production facilities of German manufacturers and suppliers here in the United States, which export a large share of their products. We hope that the new president will be open to this trade-policy interest of his domestic industrial base."

The Detroit Auto show opens to the public on January 14 after five days of presentations to the industry and the media. The show opened with the awarding of the car of the year to the Chevrolet Bolt, the midpriced all-electric offering of General Motors.