Industry Voices | Tracking Automotive Amid Big ChangesIndustry Voices | Tracking Automotive Amid Big Changes

Reporting on the U.S. automotive industry's performance has been a journalism mainstay for more than 100 years. The traditional approach to reporting performance has compared the current period with the previous period, or with the same period of the previous year. At times analysts will compare current performance with previous sales or production peaks. WardsAuto does a great job of reporting on the state of the business daily, letting dealers, suppliers and OEMs what is going on today.

However, that may not be the best way to monitor the effects of increased tariffs and changes to industrial policy. For example, the Congressional Budget Office provides an outlook of future economic activity given existing tax and spending rules. This allows economists to measure how new policies have changed their outlook. (To their credit, they also publish how accurate their forecasts have been). Additionally, consultants provide a “going concern” versus “liquidation” analysis for investors during bankruptcy proceedings. New vehicle program investment gets justified by considering production volumes for the new program versus doing nothing (carry the existing vehicle over for a few years). These analytical constructs compare two alternative futures rather than a comparison to last year.

Based on the proclamations issued by the White House, automotive sector stakeholders should expect serious disruptions to the status quo very shortly. Increased tariffs and reductions to the incentives offered by the Inflation Reduction Act are the two major shifts (among others) that appear certain. Thus, there needs to be a way to track the impact of these policy changes over multiple years.

RFQ Insights has organized a baseline forecast of key metrics to do just that. The estimates assume existing government laws and regulations but exclude proposed tariffs and potential changes to the Inflation Reduction Act. The outlook contains economic and employment performance as forecasted by the Congressional Budget Office. The production outlook reflects modest growth in U.S. light vehicle production and capacity over the next few years based on incentives provided by the IRA. The outlook for program additions and deletions is sourced from industry experts AutoForecast Solutions.

All the metrics are estimated through 2027. This wider forecast window is important, as many of the benefits provided by the Inflation Reduction Act don’t come into play until 2027. These include BEV capacity increases by Ford in Tennessee, General Motors ramping up their Kansas plant with the new Bolt and Scout’s production in South Carolina. Additionally, a few programs that are currently imported will be converted to U.S. production. All these changes are expected to provide more production, more variety and more jobs.

Each quarter moving forward, a performance update will be provided on the key metrics. The report will outline if the metrics have improved, stayed the same or deteriorated. The updated table and analysis will be part of RFQ’s Vehicle Performance Tracker.

Will duties bring back jobs to the U.S., and increase vehicle production in American plants? Answers to those questions are worth tracking. As Trump stated to the Economic Club of New York on Sept. 5, 2024, “We will bring our auto-making to the record levels of 37 years ago, and we’ll be able to do it very quickly through tariffs and other smart use of certain things that we have that other countries don’t.”

Automotive writers will be able to track that vision over the next three years.