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McLarty: President has a natural ally in car dealers

March 24, 2017
By Thomas F. "Mack" McLarty III
President Donald Trump has often been sharply critical of an auto industry that he believes is moving too many jobs overseas and is at odds with his vision of American manufacturing prowess. He used his campaign bully pulpit to scuttle Ford’s plans to move small-car production to Mexico.
He threatened General Motors and Toyota on social media with a "big border tax" and for months has been vowing to rip up several free-trade agreements — moves that could wreak havoc on the global supply chains upon which every major automaker relies.
While blasting the auto industry with heat-seeking rhetoric and a barrage of tweets may garner attention, Trump might be better off embracing it as a strong partner that can help him deliver the promises he campaigned on. He has a natural political ally in the thousands of car dealers who are the public face of the auto industry, a huge engine for job creation and an influential voice in Washington.
America’s car dealerships, after all, are the paragon of successful Main Street businesses on which Trump heaped praise during his campaign. They are powerful institutions in the Rust Belt and in the heartland, where his message of hope to working-class voters left behind by globalization and technological change most resonated. And they are big employers there, too — supporting tens of thousands of Americans who work as salespeople, mechanics and other critical roles and millions more through business relationships with parts suppliers and other outside vendors.
As the president works to revitalize communities around the country, the automotive retail industry is poised to play a major role in keeping American factories open and creating good-paying jobs. Indeed, dealerships are exemplars of the small businesses that form the backbone of the American economy.
America’s auto retailers share the no-nonsense mindset that was a hallmark of Trump’s candidacy. On the campaign trail, he touted his experience as a tough but pragmatic businessman as a key reason he would get things done in our nation’s capital. America’s dealers can certainly relate. Like the president, they are steely negotiators with a bias toward action and flexibility.
It’s what they must do every day to make sure the four-wheeled inventory keeps moving off their lots.
In fact, as the president vows to eliminate our government’s bureaucratic red tape and reshape Washington, he would be wise to look at how our nation’s car dealers have successfully evolved with the times. While new technologies, shifting consumer preferences and a more diverse customer base have significantly transformed car buying, dealers have embraced meaningful change by building on a system that has largely worked, not tearing it down.
In the dealership community, the president is likely to find strong support for many of his core policy ideas. This community has long advocated for simplifying our unwieldy tax code and lowering rates. Identifying ways to eliminate or replace cumbersome regulations with common-sense rules would also provide welcome relief.
Several industry studies find that tough new rules such as overly stringent corporate average fuel economy standards would add thousands of dollars to the price of an average vehicle, crippling demand. Auto dealers, which have locations in every community and congressional district, could provide a clear and credible voice about the costs.
These issues, of course, are only part of the Trump administration’s broader policy agenda and there almost certainly will be areas where America’s car dealers and the president disagree. As a candidate, for example, Trump vowed to renegotiate the North American Free Trade Agreement to return jobs to the United States or slap punishing tariffs of up to 35 percent on auto imports from Mexico.
NAFTA, which I have supported, has been around for more than two decades and needs to be modernized. It does not need to be ripped up. In fact, starting anew would be replete with unintended consequences that are potentially worse. Not only would pulling out of NAFTA jeopardize the billions of dollars of U.S. automotive exports that go to Mexico and Canada each year, but it could add thousands of dollars to the prices of imported vehicles and could disrupt thousands of good-paying American jobs linked to global supply chains.
In politics, as in business, success is about dealmaking, compromise and finding common ground.
One of Trump’s greatest strengths could be his ability to shake Washington out of its stupor and implement an agenda that can grow the economy and put millions of Americans back to work. But the author of "The Art of The Deal" should recognize that he will not succeed if he resorts to name-calling and veiled threats. Instead, he must find ways to work within the system and enlist the support of a wide array of political partners. America’s car dealers would be a good place to start.
The author is chairman of McLarty Cos., a fourth-generation family-owned dealership business in Little Rock, Ark. He was President Bill Clinton’s first White House chief of staff and an adviser to Presidents Jimmy Carter and George H.W. Bush.