Auto industry will have cause for cheer with Biden in the White House

by Murali Gopalan 21 Jan 2021

With Joe Biden now at the helm as President, the US will resume becoming an active participant in global trade which augurs well for the automotive industry.

It’s no secret that his predecessor, Donald Trump, was solely keen on protecting the country’s interests which effectively meant that the rest of the world would take second place. In the auto space, for instance, he wanted top brands to invest in the US first and generate jobs in the process. This was the time a flurry of investment announcements were made by companies like Toyota and Ford among others.

Trump also made his irritation known on India’s high import tariffs on Harley-Davidson motorcycles which to him were simply not acceptable. Never mind that his tumultuous four-year tenure saw another big American brand like General Motors wind up operations in India while Harley-Davison shut down its manufacturing facility and is now hoping for a fresh lease of life in a joint venture with Hero MotoCorp.

Another prominent automaker, Ford, decided to call off its planned joint venture with Mahindra & Mahindra and will continue to operate as a solo entity in India. It remains to be seen how it manages to navigate its innings especially when there are a host of challenges to cope with in the global arena. 

To that extent, the entry of Biden is not going to change the India plans for any of these American brands except that there will be other reasons to feel more hopeful compared to the Trump era. For instance, talks of imposing levies on imports from Europe and elsewhere will in all likelihood be buried.

There will be more proactive engagement with other countries which effectively means the US will now be back to its role as a critical pivot for the world. This also means being part of the Paris climate accord and this is where India could benefit in the arena of alternative fuels. This, in turn, will help the auto industry as it works towards new frontiers like natural gas and electric while gradually weaning away from fossil fuels.

The interesting part will be China where experts believe that the Biden administration will continue to maintain the tough posture adopted by Donald Trump. It may not be as overt and in-the-face but the US will not soften its stance towards the country, especially in the context of the pandemic where nearly half a million American lives have been lost. 

In a way, this will be to India’s interests given the current face-off with China and the growing call for self-reliance. Big ticket investments in the auto space from the likes of Great Wall Motors, Changan Automobile and FAW are not likely to happen till both countries decide to shake hands and move on. This, in turn, will only get a fillip if the US also smoothens relations with China and prevails upon India to follow suit.

In short, from the auto industry’s point of view, Joe Biden is welcome news both globally and to India especially when it comes to global trade. No country can afford to be isolated and when a powerful nation like the US decides to retreat, like it did when Trump was President, it hardly helps anyone’s cause. These could just be the beginning of better times ahead especially in a decade of mobility disruptions where only the best can survive.

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