16 Nov 16
News

Trump could be good news for car industry

The ample shadow of Donald Trump hung over the first session of the Fleet Europe Remarketing Forum, Tuesday in Barcelona. 

“His election brings uncertainty, in view of his incoherent proposals, which amount to reducing tax while increasing spending. But it remains to be seen whether his administration will be a radical or pragmatic one”, said Josep Mestres, Economist at Caixa Bank, who painted a picture of the global economic outlook for the 170 or so remarketing professionals at the Palau de Congressos de Catalunya. 

The fate of the global economy has great relevance on various levels for the many-faceted business that is remarketing. Some crucial pieces of the puzzle are the price of oil, which Mestres predicted would slowly recover to $60; the EU economy, which will improve from 1.3% this year to 1.5% next year; and Brexit, the severity of which will depend on whether it is an open or closed Brexit (rather than a hard or soft one), “but which will cause suffering, most of all in the UK itself”.

The focus of the subsequent panel discussion, moderated by Steffen Schick (CSO, EuroTaxGlass's), was on managing uncertainty in remarketing, notably on the risk of rising protectionism, especially poignant for an industry as globally integrated as automotive. 

Mr. Mestres suggested that the tide of anti-globalisation sweeping the world would make new free-trade agreements less likely than the elimination of existing ones. He also foresaw a trend of tariffs going up – but hopefully in a limited way. 

“The election of Trump was an absolute shock, and the markets dipped initially, but they have recovered”, said Jim Hallett, CEO at KAR Auction Services, offering an American perspective. “But if he manages to deliver on some of his promises – more jobs, lower taxes – that would lead to higher wages and more spending, which ultimately will be good for the car industry”.

Tim Albertsen (Deputy CEO, ALD) was the first, but not the last to hail the huge opportunity of private lease, especially in more mature markets: “This is where we see the biggest potential for growing our business in the coming years”.

Car-sharing is another promising formula: “In 10 to 15 years, 70% of the work force will be millennials – a generation more interested in flexible use than ownership. So we foresee the rise of flexible products, notably car-sharing, in the next years”. 

The rise of alternative powertrains is not as inexorable as some might think: “The equation is not as great as when oil was at $110 a barrel”, says Albertsen, but: “Compared to a few years ago, the product line is a lot more interesting, and my long-term vision is that we will get a lot more alt-power vehicles in our fleets. Because it is not just about TCO, but also about pollution”.

That may be a bit too idealistic for the world according to Trump: “The same dynamic does not apply to the U.S. in the same measure”, says Hallett. “The expectation is that Trump will be loosening the EPA standards that govern emissions regulation”. 

Tim Albertsen (l.) and Jim Hallett.

Image: Fleet Europe

Authored by: Frank Jacobs