By LOU WILIN
President Trump’s tariffs and tax policy are sinking sales for auto parts suppliers, an industry specialist said Thursday in Findlay.
Sales of cars, light trucks and sport utility vehicles declined in the first quarter of 2019. For the entire year, they are expected to be less than in 2018, said Lawrence Keyler, partner at RSM Global Automotive, Detroit.
“We’re having a tough year for sure,” he said.
Light vehicle sales in the United States are projected to fall short of 17 million this year, for the first time since 2014, he said. In 2018, 17.3 million vehicles were sold in the U.S.
Trump’s tariff’s are “undoubtedly” being felt by parts suppliers, Keyler said.
Increased tariffs and retaliation from other countries could be “devastating,” he said.
Trump’s trade policy already is costing U.S. auto-related companies $3 billion per month, he said.
Add to that increased spending for research and development, and political turbulence worldwide, and the result will be fewer auto parts suppliers and potentially fewer jobs, Keyler said.
But technology advances also could mean more jobs in engineering, technology, infomatics and other science-related fields, he said.
Keyler’s presentation to Findlay manufacturers was sponsored by the accounting firm Gilmore Jasion Mahler.
Tariff troubles are not expected to end soon. But even if they did, suppliers’ costs for research and development of new technology — necessary to stay competitive — will be a continuing burden.
“That investment is significant,” Keyler said.
It will be difficult to maintain both profitability and the investment in technologies, particularly when the technologies will not show returns for three or four years, he said.
Suppliers will likely forge joint venture partnerships either with other U.S. companies or overseas companies.
“That allows them to spread the risk of their investment and still look for a return on that investment,” he said.
He also anticipates parts companies merging or buying each other.
“I think they’re going to be forced to pull together to create a bigger base to spread their fixed costs over so they can continue to invest in those technologies together,” Keyler said.
Keyler also discussed other coming industry and technology changes and their ramifications:
• Autonomous vehicles could become a routine sight on roads in three years, he said. That’s sending shivers through the insurance industry, which would stand to lose much revenue as roads become safer, he said.
• “Someday, not that far out, I’m not talking 20 years” people will routinely buy cars on the internet, using their phone, Keyler said. The car dealer’s building will be smaller, and it will be relatively empty, except for a few chairs. “You sit down, you punch in what you want. (The car model). And I want these features, and I want this kind of engine,” he said.
Then you will put on glasses.
“You’re driving the vehicle. You’re seeing the picture, feeling the road, just like you would if you were to test drive a vehicle,” Keyler said. “And that’s how they are going to buy cars.”
• “Someday we probably won’t have a lot of bricks-and-mortar car dealers,” he said.
But there will be a lot of used car dealers. With all of the expensive technology in vehicles, many people will be unable to afford a new car, Keyler said.
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