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Detroit auto show reveals industry tracking two paths

Jan 14, 2017

  

The biggest stars at this week’s Detroit auto show aren’t the usual, splashy new car or truck. They’re the futuristic autonomous vehicle from Google and President-elect Donald Trump. Trump’s incessant tweeting this week has transfixed a global press corps and roiled the auto industry it covers.

Non-confrontational press releases touting billions of dollars in investments in the United States are followed by obligatory phone calls to Trump. One ranking industry executive called only to be immediately connected to The Man, who he described as being accessible and willing to listen.

That’s preferable to the opposite, I suppose.

The most common reaction I heard this week from CEOs paid to parry presidential threats came down to two words: We’ll adjust. Because, like it or not, Trump will become the 45th president.

And that means global automakers are obliged to figure out how to operate in this new world.

How, exactly, the industry will adjust depends on whether the next administration makes good on Trump’s threat to impose a “big border tax” on cars and trucks assembled in Mexico and then exported to U.S. showrooms.

The betting — aired privately, of course — is that ranking industry executives will be able to explain their business to the White House. And, that more business-savvy members of Trump’s cabinet, including Vice President Mike Pence of auto-producing Indiana, will connect the Oval Office and the industry.

We’ll see. A confrontation could be brewing between automakers and their suppliers on one side and a Trump administration on the other.

The Center for Automotive Research is warning that efforts to repeal the North American Free-Trade Agreement or unilateral imposition of 35% tariffs on Mexican-produced metal could cost 31,000 American jobs.

They say trade barriers would raise costs for producers, lower returns to investors, offer consumers fewer choices and make automakers and their suppliers less competitive. Southeast Michigan would be hit especially hard.

All of this has the distinct ring of fighting the last war. NAFTA is 23 years old this month. The reinvigorated industry, especially Detroit’s automakers, are reinvesting in Michigan and the United States and they’re placing important bets on the future of mobility.

Enter Google’s Waymo and its Chrysler Pacifica van equipped with an autonomous driving system. Without a sound, Google has just fired the next shot in the battle for the future of the global auto industry.

Who says there’s not a fight brewing? It’s one pitting the global auto industry vying for a big chunk of an estimated $10 trillion transportation services business against the high-tech players developing solutions to make it all possible.

None of them control all the pieces to make it happen and that’s not likely to change anytime soon. And the result: an auto industry moving steadily along two tracks.

This first is a gasoline-powered present weighted toward the vehicles that generate revenue and the most profit. The second is electrified, one that envisions vehicles operating without a steering wheel, a brake pedal, or a driver.

That’s the future, and it’s coming fast.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.