The Trump victory has inflicted a heavy dose of uncertainty on the capital intensive global auto industry. Implications range from questionable consumer demand for autos, the future of tariffs (NAFTA) and changes to current and pending regulations which govern the industry.

Macroeconomic

For some time there has been a growing view that US auto sales have plateaued. With that as a backdrop, a Trump administration presents more policy unknowns which may lead to market volatility. That would not be good for consumer confidence – a key factor for vehicle demand.

Trade

President-elect Trump made it clear on the campaign trail that he wanted to impose tariffs on vehicles exported from Mexico into the US. Many of the major operating equipment manufacturers (OEMs) have vehicle production facilities in Mexico, and a few foreign OEMs (VW and Nissan, for instance), have large North American footprints there. At the very least, we believe Trump's presidency will slow the pace of the migration to Mexico for vehicles and parts destined to the US.