GM economist: Global auto sales to rise in 2017, stay strong in U.S.
Source: Detroit Free Press
The global automotive industry should have a good year in 2017 as industry sales increase in Europe and China and will remain strong in North America, General Motors Chief Economist Mustafa Mohatarem said today in Detroit.
Mohatarem said concerns exist about President-elect Donald Trump’s approach to trade and how that might impact automotive sales in China and relations with Mexico.
But most of the global economy is either stable or improving, so the automotive industry should be on track for a good year globally and in the U.S., even if sales fall below the historically high 17.5 million mark that automakers enjoyed last year.
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“When you look at the auto industry, other than the two biggies Brazil and Russia, things look really good,” Mohatarem said when he spoke at an event hosted by the Society of Automotive Analysts in Detroit before the Detroit auto show. “South America is where the problem is. Brazil is in a deep recession.”
The U.S. auto industry broke the annual sales record set in 2015 as sales rose 0.4% from 17.48 million vehicles to 17.55 million in 2016, according to Autodata.
In 2017, the industry’s streak of seven consecutive annual sales increases is likely to come to an end. Most industry executives and analysts say that rising interest rates and gas prices, combined with an end to pent-up demand, will cause industry sales to drop slightly.
In China, Mohatarem said auto industry sales will continue to increase, but at a slower pace. Industry sales also are expected to continue to recover in Europe.
The wild card is the business environment in the U.S. under Trump.
Mohatarem said Trump’s idea of providing a fiscal stimulus along with the possibility of easing regulations on greenhouse gas emissions and fuel economy would help automakers.
“I am concerned on the trade front,” Mohatarem said.
GM and its joint venture partners sell more vehicles in China than anywhere else in world, including the U.S., so a rocky trade relationship between the U.S. and China could hurt the automaker.
“Mexico is a key cog in our operations as well,” he said.
Trump has said the North American Free Trade Agreement has led to the loss of U.S. manufacturing jobs and should be renegotiated. He also has talked about imposing a 35% border tariff on goods imported from Mexico.