8 Cars That Could Leave the US if Trump Increases Import Tariffs
Love it or hate it, we officially have a new president of the United States of America. And while the following article will dabble slightly into the realm of politics I am not going to share my opinion on any of it. Instead, I am going to fixate on one of the statements Trump has made prior to taking office and how this may affect cars and car manufacturers. Specifically, I am talking about his idea of creating large import tariffs of up to 35% (source WSJ)to force companies to build and assemble here in the U.S. rather than overseas.
To do this, I have dug through the Kogod Made In America Index. This index takes into account multiple processes that go into making an automobile from R&D to manufacturing. In essence it shows how much of each vehicle is from the U.S.A. Additionally, I perused through manufacturer released sales data to see which vehicles were already having a hard time. With these two metrics in mind, let’s speculate which vehicles may get cut if Trump follows through with his import rate hike.
For the last several years Mitsubishi sales in the U.S. have slid considerably. There were a few times in recent years where some experts wondered why Mitsubishi was even still trying to make it in the states. The good news for Mitsubishi is that 2016 sales rose 1.6% over 2015 and nearly every vehicle performed better year over year; except the Mitsubishi Outlander (source Mitsubishi Motors). That’s not to say Mitsubishi will get rid of the car. That would be highly doubtful…IF everything else stayed the same. Add in some extreme import tariffs thanks to Trump, Mitsubishi would likely scrap it especially since only 1% of it comes for the U.S. In fact, if the tariffs were much higher at all, Mitsubishi could pull out of the United States all together.
Alfa Romeo 4C
Fiat Chrysler Automotive as a whole hasn’t been doing so well the last few years. One of their only brands making headway year over year has been Jeep. And while the marketing campaigns and cars offered by Alfa Romeo are impressive, the abysmal sales of the entire Alfa brand are taking a toll on the parent company FCA. The 4C, in particular may be a phenomenal sports car but the brand’s return to America has been met with skepticism. Americans seem to look at Alfa’s premium price tag and the idea that the cars are unreliable. While the 4C isn’t on the Kogod index, we know it’s made in Italy.
In 2015 Alfa was able to sell 670 4Cs, but in 2016 that dropped to only 492 (source FCA). For those not wanting to do the math, that’s a 26.5% sales drop year over year and that’s never impressed anyone. While Alfa hopes the new Stelvio (no offense, but I think that’s a terrible name) SUV will bring the brand to glory. Personally, I don’t think it will help especially since it’s Maserati brother just had a big recall. Add on top of that potential huge import taxes and the 4C will be gone. In fact, Alfa Romeo would likely depart the U.S. again.
Fiat 500 and 500L
Unfortunately, I have to pick on FCA here a bit. While the initial sales of the tiny Fiat 500 did well in the U.S. it seems the love for the car’s “cute” personality and styling has seemed to wane drastically. As a whole, the company has fallen to just 33,777 unit sales in 2016 which is a dramatic 24% decline over 2015 numbers (source FCA). While the new 124 Spyder turns heads and the larger compact SUV 500X has increased in sales, both the 500 and 500L seem to be in cardiac arrest (38 and 60% decline respectively). The most likely reason for this is the lower oil prices. With gas being considerably cheaper than when Fiat came back to the U.S. buyers are reaching for the larger gas guzzlers other companies offer. Additionally, the 500 is only 29.5% American while the 500L is only 6%. Factor in Trump’s potential heavy import penalties and the 500, 500L and possibly Fiat as a whole could exit the U.S.
Here is a bit of an oddball on the list. I’m sure most of us have heard Ford’s plans to scrap their proposed plant in Mexico and invest money in their Flat Rock plant instead. According to Ford though, this had nothing to do with the Trump presidency. Regardless, Ford does still have a minor problem on its hands; falling sales of the Fiesta. Year over Year, the Fiesta has fallen 24.3% (source Ford). Like the Fiats listed above, this is likely due to the lower gas prices and more people buying large SUVs and so forth. Nevertheless, it’s never a good sign to see a car’s sales drop nearly a quarter. If Trump goes through with his plans to heavily tax imports to try to get more products made here in the states, the Fiesta could be a victim. After all, according to the Kogod index, only 15.5% of the car is produced domestically. Then again, if Ford’s investment into its Michigan plan picks this number up higher it could very well stay.
This would be borderline heresy for car guys wouldn’t it? Nissan’s flagship sports car…freakin’ Godzilla being taken out of the public eye in the U.S.!?! Well just remember, this list is all opinion and speculation so nothing is set in stone. That being said, one of the biggest sales disappointments for Nissan in an otherwise great year in the states has been the GT-R. According to their numbers, sales for the GT-R are down 36.8% in 2016 compared to 2015 (source Nissan). Granted, this is a rather low production car to begin with so any sales drop is going to affect the overall percent. But let’s take a further look at the GT-R. While there have been numerous special editions and light upgrades to styling and performance, the car has been largely unchanged since its debut in 2007. Combine that with ever increasing prices, the car seems to be turning off buyers. In addition, the Kogod index says only 1% of the car can be attributed to the United States. If Trump made any increase on imports the beloved GT-R could be banished from American shores.
While the A5 may be a good looking two seater with multiple engine options (S5/RS5), the car may be in trouble in the near future. Besides the fact Kogod marks all of the Audi 5 series vehicles at only 1.5% United States backed, sales have declined over the last several years. For example, 2016 saw a 35.4% decline over 2015 which in turn had a 22.2% decline over 2014 which had an 11% decline over 2013 (source Audi USA). Needless to say, there probably aren’t many companies that like seeing a 3 year progressive decline in sales. Tack on the larger VW Group’s dieselgate and it’s easy to see how the A5 could land on the chopping block for the U.S. Again, if Trump is able to pass higher import tariffs for manufacturers, would Audi really keep it around?
It seems every company has their black sheep when it comes to U.S. sales. For Mercedes (besides SMART), that would be the SLC/K. Year over year for 2016 it seems the sales dropped 18.8% to 3,397 units sold (source Daimler). Again, this wouldn’t be much of a problem for most manufacturers. Even at a lower sales volume, the SLC helps Mercedes have a larger, more complete lineup designed for any budget. Unfortunately, this article is about what cars could potentially leave the states if President Trump enforces penalties on imports. And while most of Mercedes cars are made overseas and only receive 1% of anything from the U.S., with the SLC being the worst seller, I would guess it would be the one to get the axe.
BMW 6 series
I’m going to say this is highly unlikely to happen, but based on some of the facts in front of me maybe plausible? BMW in general had a tougher year in North America, stating it had an overall decrease of 9.5% compared to 2015 (source BMW NA). Looking at their sales records, one of the worst performers year over year was the unfortunate 6 series. Honestly, in terms of looks, the 6 series is one of my favorite BMWs at the moment. The Grand Coupe is absolutely stunning and if I had any money at all, I would be driving one. Personal tastes aside, the brand reported a 51.5% decrease in sales for the 6 series from 2015. Now, one thing to keep in mind is that BMW will be unveiling a new 6 series sometime in the next year or two. Still though, with more than half the sales being taken away from one model, this can’t just be brushed off. Factor in potential import issues via Trump with a car that only has 3.5% U.S. blood and the 6 series could see a push.
No one really knows exactly what President Trump will want to do or be able to pass. This list is just a preview of vehicles that could face larger issues if his initial statements and plans about raising import tariffs come true. Most, if not all of the cars listed are currently having sales issues already and may have general issues with the entire brand here in the U.S. Honestly, there is no crystal ball to see what will happen, but when declining sales are met with higher import or production costs, manufacturers are usually quick to respond. Here’s to hoping these cars and companies can pull through, because there are several vehicles on this list that are favorites to some of us gearheads.