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What dealers say they want from the Trump presidency

March 10, 2017
Since Donald Trump’s presidential inauguration in January, automotive industry headlines have focused on the impact of a new border tax on imported vehicles and where manufacturers produce their products.
New taxes, naturally, increase the cost of products for consumers; and a renegotiated North American Free Trade Agreement could increase automakers’ costs of doing business.
But what do dealers expect from the 45th president and his administration? The Gillrie Institute, based in Florida, surveyed a cross section of more than 200 dealers for their assessment about the "Trump Effect" on their businesses.
 
Positive Tailwinds
• 68 percent believe that the overall conditions for success in the industry will improve;
• 73 percent believe that Trump’s stance on corporate tax reduction will increase after-tax profit;
• 71 percent believe that lower personal income taxes and higher spendable income will help sell more vehicles;
• 76 percent are optimistic that deregulation will help save regulatory and compliance costs;
• 66 percent think that Trump will unwind the Affordable Care Act and reduce the corporate healthcare burden.
 
Uncertainties
• 43 percent said Trump’s border tax would increase sales of American-manufactured vehicles;
• 47 percent believe that Trump’s unorthodox communication methods will increase consumer awareness about U.S.-manufactured vehicles;
• 42 percent feel the Trump administration will secure dealership jobs and strengthen the franchise-dealer model;
• 27 percent believe that Trump will slow down momentum of autonomous driving trends and alternative vehicle ownership models.
About half the survey participants, 53 percent, were dealer principals, but the balance represented a diverse mix of senior and middle management and other dealership personnel.
 
Other expectations
Union Auto Workers jobs might reverse the downward trend they have experienced in recent years. General Motors, Ford, and Fiat Chrysler Automobiles have to expand domestic capacity because it’s more difficult to establish manufacturing in Mexico, and the jobs they create will be UAW jobs.
 
Those jobs are more likely to grow in the upper Midwest because Ford, GM and FCA need to build a lot of trucks and SUVs.
The Gillrie Institute also said the Trump administration is expected to ease regulatory burdens, invest heavily in infrastructure and lower both corporate and personal income tax burdens. That could further boost the outlook for OEMs and dealers by increasing the bottom line for companies and boosting the spending power of consumers.
The growth of electric cars in the U.S. market may be somewhat softened if environmental concerns take a back seat to economics. Because alternative vehicles are more expensive than those that are gas-powered, electric cars will need continuing state and federal government incentives to make their sticker price more appealing. Given President Trump’s expressed distrust in assertions of global warming, he can be expected to be less supportive of these subsidies.
While some in the industry may stand to lose, there is a significant upside to the policies of the new administration as well, the Gillrie Institute opined, adding that President Trump’s pro-business approach could very well prove to be the impetus for a fundamental change in the way companies operate today and lead to the overall industry transformation.
 
 

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