An Uncertain Forecast

Chairman's Blog: Hakes' Takes 08/26/19

Last week, I traveled to D.C. to find the swamp as hot and sticky as ever, but strangely quiet. August, apparently, is when Congress recesses and lawmakers head home to their districts to get some work (i.e. campaigning) done. I don’t blame them for trying to escape the humidity, but they will certainly have their hands full when they return to town in September.

First and foremost is the economy. The stock market stumbled this month in response to the intensifying trade war with China, and the president is now contending that interest rates are too high. For dealers, what happens next in this standoff between China, the U.S., and Federal Reserve will shape our business outlook for the remainder of this year and well into the next.

Of course, China isn’t the only trading partner in the White House’s line of fire. President Trump continues to use threats of auto tariffs against the E.U. as a cudgel to bring them in line on trade, NATO spending and other issues. Reportedly little progress is being made on that front, but Japanese trade representatives were in town last week, making some headway on a U.S.-Japan agreement. In addition, a vote on the U.S.-Mexico-Canada agreement is expected to be added to Congress’ schedule this fall.

Even if those agreements pan out that may not solve the issue of 232 auto tariffs, which could go into effect this November based on the Department of Commerce’s finding that imported autos and auto parts represent a national security threat to the United States. At 25 percent, 232 tariffs stand to cost our industry 2 million sales annually and 117,000 dealership jobs. AIADA continues to work with manufacturers in D.C. to push back against the argument for these tariffs, and ensure they never see the light of day.

As if that wasn’t enough, the battle over federal emissions regulations continues at the national and state levels, and likely soon in court rooms. The industry’s desire for one national standard remains just out of reach, complicating automakers’ plans for growth and innovation in the United States.

The weather in D.C. may soon cool down, but thanks to all of these issues (I didn’t even mention Greenland!) the outlook for dealers will remain hazy and uncertain well into the fall. Like any business, auto retailing thrives in a stable and steady environment. Unfortunately, that’s not in the forecast. Fortunately, dealers have AIADA keeping an eye on the horizon and count on us to sound the alert when the time comes to spring into action. Until then, batten down the hatches. It’s going to be a wild fall.

Howard Hakes
2019 AIADA Chairman

Chairman's Blog: Hakes' Takes

In Hakes' Takes, AIADA Chairman Howard Hakes provides a look at the issues and trends facing the international nameplate auto industry.