CAR chart compar ng vehic e production in the US Canada and Mexico


the implementation of border adjustment to estimate consumer price changes. These changes are based on: vehicle manufacturers’ changes in effective taxable income, changes in auto manufacturers’ input costs from the automotive parts sector, and assuming no change in unit sales or domestic production or shifts in sourcing or production investments.


CAR estimates that the immediate responses to border


adjustment would be: t Automotive parts and materials prices would increase by 8.4%.


t US light vehicle prices would increase 5.6%. t Average per vehicle price increases are estimated at $1970.


t Given 2016 US sales at 17.5 million, the price increase represents an aggregate $34.6 billion in higher costs to consumers.


Potential for Jobs to Come Back to the United States


Finally, CAR has identifi ed three reasons to be pessimistic about auto jobs returning to the US in large numbers: t Current talent shortages (the unemployment rate


in the transportation equipment sector was 3.7% in 2016—fully one point lower than the national


average); in addition, shortages are especially acute in skilled trades occupations.


t Global competitiveness—every auto production region sources from low-cost/best-cost countries; the US auto industry would be less competitive on a global stage without use of “best-cost” parts and components.


t The US light vehicle market is near the top of the cycle; manufacturers will be cautious about making greater US investments that could lead to an over- capacity situation as the market eventually slows or begins to contract.


Automotive industry strategies, including sales and


production outlook and the implications of tax, trade, and fuel economy policies, will be among the key topics on the agenda at the 2017 CAR Management Briefi ng Seminars, July 31–Aug. 3 in Traverse City, MI. Executive management from automakers and suppliers along with leaders in fi nance, academia, workforce development, media, and government will be there to connect and discuss the issues affecting the industry today. More information is available at http://www. cargroup.org/mbs/


Yen Chen is senior industry economist and Kristin Dziczek is director of the industry, labor and economics group at CAR.


AR chart compariing vehiclle production in the US, Canada and Mexico.


15 — Motorized Vehicle Manufacturing 2017


Image courtesy CAR


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