Carmakers struggle with Trump as Obama advisor says Trump ‘doesn’t understand the car industry’

January 31, 2017

Carmakers have announced billions of dollars of investment in US plants as they do all they can to play by Donald Trump’s rules. FCA Group has said it is prepared to shift production of heavy pick-up trucks to the US from Mexico, while Ford has cancelled a Mexican car plant at a cost of $200 million, ostensibly to please the president and convince him that it is keeping jobs in the US. However, it does not seem to matter whether the money pledged by carmakers has already been planned or announced, just so long as Trump can claim it as a personal victory.  

This has led Steven Rattner, a US investor and former advisor to Obama on the auto industry to question whether Trump is really pursuing a cohesive strategy with his pithy announcements on Twitter. In an era of post-truth and ‘alternative facts’, it seems entirely possible that OEMs may be able to play to Trump’s political system with clever marketing in many cases, rather than making any demonstrable changes to their operations.  

Multinationals are turning to PR advisers to help tailor their media messages to suit Donald Trump’s new political agenda. The basic strategy is to look at whether you have made an announcement in the past that you can rehash to align with the president’s election promises, a lawyer who worked for Mr Trump during a high-profile bankruptcy case in the 1990s told the Financial Times.  

People have understood that Donald likes to win and they need to play into that.’  

For example, when Ford decided that falling small car sales in the US meant they did not need a new plant in Mexico any more, instead of saying this, they used it as a PR opportunity to please Trump. The closure was dressed up as a ‘vote of confidence’ in the president and linked to news of new jobs in the US. They were duly rewarded with a celebratory Tweet by the then President-elect, claiming credit for the ‘victory’.  

Trump likes to play at heavy politics to please his fan base. Michael Abrahams, a partner at Finsbury, outlines in his guide that companies should monitor Trump’s politics and identify what might attract the president’s attention and play into his narrative with their response – regardless of whether it is true or not.  

Anything that can be perceived — accurately or not — as having a negative possible impact on American jobs, competitiveness, or national security is a ripe target.’  

Rattner believes that Donald Trump does not understand the car industry, saying: ‘Much of what Trump says shows that he does not understand the most pressing problems in the auto industry in the US,’ adding: ‘General Motors has tried to introduce Chevrolet in Europe, but without success. Europeans just do not want to buy these cars.Sigmar Gabriel (SPD), Germany's outgoing Minister of Economic Affairs, has commented casually: 'The US has to build better cars.'  

If Trump does not understand the car industry – or disregards the truth to boost his politics and image – then it follows that the usual arguments such as that tariffs will harm the US will not work on the new president, and OEMs instead must play by his own narrative to prevent retaliation.  

Executives should keep data close at hand, including 'important facts about your US footprint — number of jobs, number of US suppliers, total capital investment,' recommends Abrahams.  

Rattner concludes that the ‘irony of the policy of the new government’ is that the Trump government is unlikely to do anything to help those who elected Trump. He said: ‘People with a lower income are more likely to buy imported goods because they are cheaper. If duties are levied now, it is exactly those who are already considered to be the victims of globalisation that will be hit. 

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March 31, 2017

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