Will Trump's Mexican tariff affects auto sales

Trump negatively affects the image of car brands

You rarely see such a point loss: Ford slipped from one of the top 10 car brands to 27th place within three months. These are numbers from Mexico and they come from the YouGov brand monitor BrandIndex.

The BrandIndex reflects the opinion of consumers on hundreds of brands. In the eyes of Mexican consumers, Ford has suffered an immense loss of image, caused by a decision at the beginning of January to invest in the USA instead of building a new plant in Mexico.

Donald Trump recorded this as a success of his politics even before he took office. American consumers, however, are surprisingly unimpressed. There can be no question of patriotic enthusiasm for a trend reversal in the automotive industry. But the trend in the US fire index looks positive for Ford and GM. The buzz, our dimension for analyzing positive or negative news about a brand, also signals a slight increase; So Americans have been saying for a few weeks that they have been hearing more and more positive news about Ford.

But we also measure the employer image of brands, among other things, and we have not yet seen any significant change here. The new factories have not yet been built and it is not yet clear how many people and how many robots will work there.

GM is losing prospects

A very different picture in Mexico. Most consumers there state that they have recently heard negative news about Ford. Until the beginning of January, the buzz value was still stable in the positive range of our scale from -100 to +100 points. Ford's image as an employer is also negative. The car manufacturers Fiat and Chrysler, now united in one group, are also no longer valued as employers in Mexico. The reputation of General Motors (GM) has crashed but is still slightly positive.

The shifts at Ford have not yet had a major impact on purchasing behavior. For many Mexicans, buying a Ford is still an option: one in four would shortlist the brand when buying a car. General Motors has more to worry about here. Before Trump was elected, one in four Mexicans was also interested in the brand, currently there are almost half as many. GM had been heavily attacked by Trump for producing small cars for the US market in Mexico. A little later, GM announced that it would be relocating hundreds of jobs from Mexico to the United States.

What the president tweets and how the companies concerned react to it has direct consequences for the impression consumers have of a brand. In the case of GM, it even affects the intended buying behavior unusually quickly. It will be a difficult task for car manufacturers not to be politically ousted and at the same time to send a positive message to consumers on both sides of border fences and walls.

With the exception of VW, everything is still stable at the German car manufacturers

Donald Trump has also focused on German carmakers: Daimler, Volkswagen and BMW should pay 35 percent punitive tariffs if they have their cars built abroad but want to sell to the USA. But the image of German carmakers in the USA has so far been largely stable. The trend at Mercedes, Audi and BMW is pointing downwards, but to an extent that a short-term recovery is also possible. Only Volkswagen has experienced a significant downturn in buzz and image since mid-January 2017. But that seems to have more to do with the aftermath of the emissions scandal than with the statements made by Donald Trump.

CONTEXT

Market shares of automakers in the USA

Three percent market share

Both Subaru and VW have a three percent market share in the USA.

The numbers refer to July 2016.

Source: Kelley Blue Book Automotive Insights

Seven percent market share

"Others" have a market share of seven percent.

Nine percent market share

Hyundai-Kia have a market share of nine percent. Nissan also gets nine percent of the cake.

Ten percent market share

Ten percent of the US auto market is owned by Honda.

Twelve percent

Twelve percent of the cars sold in the US are from Fiat.

14 percent market share

Toyota has a 14 percent market share.

15 percent market share

Ford has a market share of 15 percent in the United States.

18 percent market share

General Motors has an 18 percent market share.