SUSAN: GET READY TO PAY A LITTLE
BIT EXTRA FOR THAT MERCEDES OR
THAT BMW IN THE FUTURE.
THIS AS PRESIDENT TRUMP REVS UP
THREATS OF A PROSPECTIVE 25%
TARIFF ON IMPORTED CARS AND
ORDERS A REVIEW OF RETALIATORY
AUTO TARIFFS ENACTED BY CHINA.
THE PRESIDENT SINGLING OUT
GENERAL MOTORS, GM THIS MORNING
ASSERTING THAT THEY COULD HAVE
PREVENTED THE LAYOFF AND PLANT
CLOSURES BY IMITATING OTHER CAR
COMPANIES, TWEETING QUOTE, TO
GENERAL MOTORS, IT'S VERY
COUNTER TO WHAT OTHER AUTO
COMPANIES ARE DOING.
BIG STEEL IS OPENING AND
RENOVATING PLANTS ALL OVER THE
COUNTRY.
AUTO COMPANIES ARE POURING INTO
THE U.S. INCLUDING BMW WHICH
JUST ANNOUNCED A MAJOR NEW PLANT
IN THE USA WHICH IS BOOMING.
OUR NEXT GUESTS REPRESENT ALL
THE AMERICAN AUTO DEALERSHIPS
THAT SELL AND SERVICE
INTERNATIONAL NAME PLATE BRANDS.
WE WELCOME PRESIDENT AND CEO OF
THE AMERICAN INTERNATIONAL
AUTOMOBILE DEALERS ASSOCIATION,
CODY LUSK ALONG WITH AUTOMOTIVE
AND TECH GURU, "WALL STREET
JOURNAL" REPORTER TIM HIGGINS.
GUYS, GREAT TO HAVE YOU.
CODY, START WITH YOU.
DO YOU THINK THAT'S TRUE?
THERE ARE STUDIES THAT SAY BMW
ARE OPENING UP PLANTS BUT MOST
OF THEIR ENGINES ARE MADE
OUTSIDE THE U.S.
>> WELL, YOU KNOW, WE ARE VERY
PROUD OF THE MANUFACTURERS THAT
HAVE BUILT HERE IN THE U.S.,
THAT KEEP COMING HERE.
YOU JUST HAD LAST WEEK, TOYOTA
AND MAZDA ANNOUNCE A NEW PLANT
DOWN IN THE SOUTH SO WE'RE
EXCITED THAT'S GOING TO BE
COMING ONLINE.
I THINK THE BIGGER PICTURE HERE
IS CLEARLY GENERAL MOTORS AND
ITS ANNOUNCEMENT EARLIER THIS
WEEK TOUCHED THE DREADED TRUMP
TWEET NERVE AND THAT'S NEVER
GOOD FOR ANY COMPANY OR ANYBODY,
BUT WHAT THEY DIDN'T SAY IN
THEIR ANNOUNCEMENT WAS THAT THEY
WERE DOING ALL OF THIS AS A
RESULT OF ANY UNFAIR TRADE
PRACTICES OR ANYTHING THAT
ANOTHER COUNTRY HAD DONE THAT
AGAIN, WAS UNFAIRLY PUTTING
IMPORTS INTO OUR COUNTRY.
THE PRESIDENT IS THE ONE THAT
TOOK THAT LEAP AND THAT'S WHAT
HAS US VERY ALARMED.
SUSAN: SOUNDS LIKE MAYBE HIGHER
AUTO TARIFFS ARE NOT THE
SOLUTION.
THAT IS THE CASE IN YOUR VIEW,
TIM?
>> WELL, FOR GENERAL MOTORS THE
ISSUE IS THEY WEREN'T SELLING
CARS HERE IN THE STATES.
YOU LOOK AT THE FACTORIES THEY
ARE CLOSING IN OHIO, LORDSTOWN
FACTORY A FEW YEARS AGO WAS
RUNNING ON THREE SHIFTS PUMPING
OUT CHEVY CRUZE, THE CAR THAT
WOULD COMPETE AGAINST THE TOYOTA
COROLLA.
SALES HAVE PLUMMETED ON THAT
VEHICLE DOWN TO ONE SHIFT WHICH
REALLY ISN'T SUSTAINABLE.
FOR THEM IT WAS A BUSINESS
DECISION THAT THEY ARE GETTING
OUT OF SMALL CARS IN THE U.S.
SUSAN: YEAH, BECAUSE THE ECONOMY
IS SLOWING DOWN, PEOPLE ARE NOT
BUYING SMALL CARS ANYMORE, CODY.
>> WELL, THEY ARE, BUT THEY
WEREN'T BUYING GENERAL MOTORS
SMALL CARS.
THAT'S SOMETHING THAT'S HAPPENED
OVER THE LAST TWO DECADES.
THEY REALLY HAVEN'T BEEN
COMPETITIVE IN THE SEDAN SEGMENT
IN A LONG TIME.
THAT'S A SEGMENT THAT'S BEEN
DOMINATED BY HONDA, TOYOTA.
FRANKLY, THEY ARE COMMITTED TO
THAT SEGMENT MOVING FORWARD, BUT
THERE'S NO QUESTION THAT WE HAVE
SEEN THE SALES MARKET TURNED ON
ITS HEAD A LITTLE BIT WITH 70%
LIGHT TRUCK SALES AND SUVs AND
30% SMALL CARS.
SO IT'S A VERY TOUGH SEGMENT TO
COMPETE IN.
SUSAN: IT IS.
I WOULD PUSH BACK A LITTLE BIT,
BECAUSE I DON'T THINK SMALL CARS
ARE SELLING.
THEY ONLY MAKE UP LESS THAN 30%
OF THE MARKET NOW WHEN THEY USED
TO DOMINATE, THE SEDAN MARKET OR
SEDAN LINES USED TO REPRESENT
OVER 50% OF THE MARKET.
I REALLY WANT TO TALK ABOUT
VOLVO.
THEY HAVE REDUCED ITS HIRING
PLAN BECAUSE OF IMPENDING, THEY
BELIEVE, HIGHER AUTO TARIFFS.
THAT'S NOT GOOD FOR THE U.S.
ECONOMY.
>> I WAS JUST TALKING TO THE CEO
OF VOLVO IN L.A. FOR THE AUTO
SHOW YESTERDAY.
THIS IDEA OF RAISING TARIFFS ON
CARS, HIS POSITIONING ON THAT,
AND HE SAID EITHER WAY, THEY CAN
BUILD MORE FACTORIES IN THE U.S.
OR COULD PAY THE TARIFFS, IT'S
GOING TO AFFECT THE CONSUMER IN
THE SHOWROOM.
THAT COST WILL BE CARRIED OVER
TO THE POCKETBOOKS OF PEOPLE
BUYING CARS IS WHAT HE SAID TO
ME.
SUSAN: OKAY.
BUYING CARS.
LET ME JUST GET BACK TO THE
TARIFFS AND ACTUALLY SOME OF THE
EXTENDED REBATES THE PRESIDENT
THREATENED TO TAKE BACK FROM
GENERAL MOTORS.
I WAS DOING SOME OF THE MATH,
AND I WAS LOOKING AT IT.
YOU KNOW, A LOT OF THE PEOPLE
THAT BENEFIT FROM THE $7500
CREDIT, GETTING THEIR TAXES BACK
ON BUYING ELECTRIC VEHICLES ARE
THOSE IN THE HIGHER INCOME
RANGE.
YOU NEED AT LEAST CLOSE TO
$300,000 IN AVERAGE HOUSEHOLD
INCOME TO EVEN AFFORD A TESLA.
IF YOU WANT TO BUY ONE OF THE
GENERAL MOTORS MADE ELECTRIC
VEHICLES, YOU NEED A HOUSEHOLD
INCOME OF CLOSE TO $200,000.
IT DOESN'T EVEN HELP THE AVERAGE
AMERICAN AT THE END OF THE DAY.
>> THOSE CREDITS ARE ABOUT TO
RUN OUT FOR GENERAL MOTORS AND
THEY JUST RAN OUT FOR TESLA.
ONCE THEY HIT 200,000 UNITS
THOSE TAX CREDITS ARE GOING
AWAY.
WHETHER THOSE TAX CREDITS HAVE
BEEN GOOD OR NOT FOR THE AVERAGE
AMERICAN CONSUMER IS SOMETHING
THAT A LOT OF PEOPLE HAVE BEEN
QUESTIONING, BUT A LOT OF OTHER
MANUFACTURERS ARE ANXIOUS TO
SELL IN THAT SPACE AND I JUST
CAME BACK FROM THE L.A. AUTO
SHOW, TODAY.
THERE, EVERYBODY IS VERY
PROGRESSIVE, THEY ARE TRYING TO
FOCUS ON THE FUTURE.
A LOT OF THESE BIG PICTURE
THINGS THAT ARE COMING DOWN THE
PIKE AND WE ARE HERE ARGUING
ABOUT AUTO TARIFFS LIKE IT'S
1980 AGAIN.
SO THAT'S WHAT I THINK HAS A
LITTLE BIT, EVERYBODY A LITTLE
ALARMED IS THAT WE CAN'T LOOK
WAY INTO THE FUTURE TO MAKE
HEAVY INVESTMENTS WHEN THERE IS
SO MUCH UNCERTAINTY IN TODAY'S
MARKETPLACE.
SUSAN: OKAY.
JUST TO GET BACK TO THAT POINT,
CODY, LOOKS LIKE $40 BILLION OF
JAPANESE-MADE CARS ARE IMPORTED
INTO THIS COUNTRY.
$20 BILLION COMES FROM GERMANY.
IF YOU ARE PAYING MORE FOR YOUR
CARS AT THE END OF THE DAY,
DON'T YOU THINK IT HURTS THE
AMERICAN CONSUMER?
>> YOU'RE LOOKING AT A TAX
INCREASE ON THE AMERICAN
CONSUMER.
THE AVERAGE VEHICLE IS $35,000.
SO YOU ARE LOOKING AT AN AVERAGE
PRICE INCREASE OF ABOUT $7,000
PER VEHICLE.
YOU LOOK AT WHAT'S GOING ON IN
THE MARKETPLACE, WE ARE SORT OF
PLATEAUING NOW.
INTEREST RATES ARE UP.
NOW, THEY ARE STILL HISTORICALLY
LOW BUT YOU HAVE A BUYER FOR THE
FIRST TIME EVER THAT'S ACTUALLY
HAVING TO PAY AN INTEREST RATE.
THAT'S A UNIQUE DYNAMIC THAT'S
IN THE MARKETPLACE NOW.
YES, THIS IS A BIG HEADWIND FOR
THE U.S. CONSUMER.
SUSAN: YOU BET.
ALL RIGHT.
SOUNDS LIKE YOU GUYS ENJOYED THE