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Michael Robinet of IHS Automotiversquos global advisory practice and Ford Chief Economist Emily Kolinski Morris talk politics Tom Murphy
<p>Michael Robinet of IHS Automotive&rsquo;s global advisory practice and Ford Chief Economist Emily Kolinski Morris talk politics.</p>

Auto Industry Leans Toward Clinton for President

&ldquo;If we have to start worrying about whether we are producing in Mexico, or trade agreements, that will add a whole other level of risk and uncertainty into this industry that frankly, as you&rsquo;ve seen, we really don&rsquo;t need,&rdquo; analyst Michael Robinet says.

DETROIT – Ignore, if you can, the personal attacks against the two major-party presidential candidates and assertions that they are crooked, repugnant, robotic, dangerous or ill-prepared to occupy the Oval Office.

Instead, ponder whether the auto industry will be better served by Democrat Hillary Clinton or Republican Donald Trump. Last week, the question was posed this way to economists on a panel session hosted by Charles Chesbrough, executive director-strategy and research at the Original Equipment Suppliers Assn.

Two of the four economists responded to the question at last week’s OESA 2016 Annual Conference, and both see Clinton as the preferred candidate.

OESA's Chesbrough.

Without dredging up Trump’s attack on Ford for investing in vehicle production in Mexico, Ford Chief Economist Emily Kolinski Morris instead refers to a survey conducted by the National Assn. for Business Economics, whose members were asked which candidate is best for the economy.

“Generally speaking, what’s good for the economy is good for the auto industry,” Morris says. “They felt by a reasonably large margin that candidate Clinton would be better for the economy. It was about a 10 percentage point spread.”

Michael Robinet, managing director of IHS Automotive’s global advisory practice, considers Clinton the better choice to maintain stability as it pertains to trade policies and automotive regulations.

“We’ve had a Democratic administration for eight years, and we know what the regulations will be for the next eight to nine years, or at least they’re under review,” Robinet says. “But we know what we know.”

The auto industry will continue to confront change on a massive scale, from development of self-driving technology and lightweight materials to propulsion systems increasingly fueled by electricity and even hydrogen.

“If in fact a Democratic administration would come back in, it’s probably not going to change the trajectory that we know,” says Robinet, who is Canadian-born but has dual citizenship.

“So from that perspective, if you want to think about it as less change or at least more known, that would be a positive,” he says. “If we have to start worrying about whether we are producing in Mexico, or trade agreements, that will add a whole other level of risk and uncertainty into this industry that frankly, as you’ve seen, we really don’t need.”

As the panel discussion veered toward general economic trends, Chesbrough asked if the next downturn in vehicle sales will be a “cliff-type event,” as occurred in 2008 and 2009, or a slower descent.

Paul Traub, senior business economist for the Federal Reserve Bank of Chicago, says the previous recession was a financial crisis of global proportions, referring to the 2008 collapse of subprime mortgage lending that forced Lehman Brothers into bankruptcy and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets.

“It wasn’t a cyclical adjustment for the economy,” Traub says, referring to 2008. “And I don’t think we would enter into the next downturn with a financial kind of tone to it.”

Wells Fargo's House (left) and Paul Traub of Federal Reserve Bank of Chicago.

Sarah House, vice president and economist at Wells Fargo Securities, sees the economy continuing to grow through 2018, but she says potential for a recession lies in a sudden shock, which can’t be predicted, or an imbalance in the economy.

“Given there aren’t very large imbalances in the economy, we think it would be a much more mild recession than certainly 2007 or 2008,” House says. “Probably more like a 2001 scenario.”

Wells Fargo forecasts U.S. vehicle sales of about 17 million units in 2017 and a slight dip to 16.9 million in 2018, partially due to tightening credit standards and a slowdown in vehicle demand.

“It’s still positive but not as strong as we’ve seen over the past few years,” she says of demand for new cars, which will be impacted by a glut of used vehicles coming off lease and entering the market.

Bottom line: “We’re not expecting sales to collapse by any means, but we do think the sales environment will be tougher over the next two years,” House says.

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