An automotive industry expert forecasts that light-vehicle sales in North America will plateau over the next five years but said that communities such as Columbus with strong ties to the industry should view that as a positive sign.
Light-vehicle (passenger cars under 8,500 pounds) sales of 17.5 million in 2016 will dip slightly to 16.3 million by 2020 and hold around that figure through 2022, said Bernard Swiecki, director of the Automotive Communities Partnership at the Center for Automotive research in Ann Arbor, Michigan, during his keynote speech Thursday at the Greater Columbus Economic Development Corp.’s annual meeting at The Commons.
The Center for Automotive Research (CAR) is a nonprofit think tank that provides knowledge for the auto industry. The Automotive Communities Partnership, which Swiecki leads, provides communities with information to help shape decisions and connects them with auto industry executives.
CAR’s projected dip and plateau is related to the sales of certain types of autos, Swiecki said.
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Sales of electrified vehicles, pickup trucks, sport-utility vehicles (SUVs) and crossover utility vehicles (CUVs) were up in August compared to the same month in 2016. However, sales for large, mid-size and smaller cars were lower than a year ago.
“Don’t be alarmed by a plateau,” Swiecki said after the meeting, attended by about 360 people. “The headlines have been more negative than they should be. We’re still going to sell a lot of very high (domestic parts) content vehicles.
“We’re under capacity anyway,” he said, noting vehicle inventory is not in excess. “We’re straining to produce what (auto makers) need to produce because they’re trying to find the right people (to hire). It’s not an environment like the (last recession in 2000) where we had too much capacity.”
The data and forecast of steady — although plateaued — sales that Swiecki presented was positive news for Jason Hester, president of the Greater Columbus Economic Development Corp.
Columbus is home to a Fortune 200 company, Cummins Inc., best known for making diesel engines — although it also is forging ahead in the electrification field — and many auto components suppliers.
“That should mean for steady work for our local suppliers,” Hester said after the meeting.
Engine and automotive equipment manufacturing combined employ 25 percent of all local jobs, and those jobs support thousands of others, said Mark Pratt, Greater Columbus Economic Development Corp.’s vice chair, in his introduction of Swiecki.
The Center for Automotive Research also is forecasting that few drastic changes will be made to the North American Free Trade Agreement even though the Trump administration has said it wants to rework the pact, Swiecki said.
“The auto industry supports keeping NAFTA as it is,” Swiecki said.
“In all likelihood we’re going to come up with some small changes and improvements, especially when it comes to addressing security and intellectual property,” he said.
The Center for Automotive research analyzed the proposed 35 percent border tariff on Mexico that President Trump proposed during his presidential campaign. Its analysis concluded that imposing such a tariff would result in the loss of 38,000 U.S. jobs, Swiecki said.
Also, the belief that imposing tariffs on Mexico would result in more cars being made in the U.S. and with U.S. goods isn’t accurate, Swiecki said. Instead, more cars would be made in countries such as Slovakia, Serbia, Hungary, China, South Korea, Thailand, Australia, Italy — where they are already being made, he said.
Trade is important with Mexico, Swiecki said. For example, Indiana ranks seventh among the 50 states in trade with Mexico in the auto industry. In comparison, Indiana ranks fourth in trade in the auto industry with Canada, he said.
That’s notable because The Brookings Institution’s Metropolitan Policy Program ranked Columbus No. 1 among U.S. metro areas by exports as a percentage of local gross domestic product — the broadest measure of economic output. Exports comprise 50.6 percentage of Columbus’ gross domestic product.
“All in all, I’m not anticipating a trade war. I’ve just got to believe that cooler heads will prevail,” Hester said.
Some key points of Bernard Swiecki’s keynote speech Thursday at the Greater Columbus Economic Development Corp.’s annual meeting:
- Light vehicles sales in North America will plateau over the next five years
- A plateau is positive
- Few drastic changes to the North American Free Trade Agreement are likely
- Smaller changes to NAFTA are probable, and likely to address security and intellectual property
- A 35 percent border tariff on Mexico would result in the loss of 38,000 U.S. jobs, according to an analysis by the Center for Automotive Research
Some numbers from the Greater Columbus Economic Development Corp.’s annual meeting Thursday at The Commons:
360: Estimated luncheon meeting attendance
110.5: Amount in millions of capital investment announced in Columbus by local employers within the past 12 months
1: Number in millions of college-educated individuals ages 22-35 and living one to four hours away from Columbus reached by the Greater Columbus Economic Development Corp.’s talent-attraction campaign, announced last year
2.97: Number in millions of impressions made on target audience in the talent-attraction campaign