Pub. 16 2017-2018 Issue 4

The American International Automobile Dealers Association (AIADA) was founded almost 50 years ago when a group of Volkswagen dealers said, “enough” to Washington’s damaging stream of tariffs and trade quotas. By banding together, they were successful in pushing back against protectionist tenden- cies. Since then, AIADA’s footprint has expanded to include over 9,600 international nameplate dealers, representing a portion of the auto retail industry that accounts for 59 percent of all vehicles sold in the United States. The growth of the international nameplate auto industry in the U.S. is a testament to the role that the global market and trade has played throughout the U.S. auto industry among both domestic and international automakers. Today, America’s auto industry accounts for nearly 7 million American jobs – including 1.6 million dealership jobs – and it continues to invest billions into communities in the form of manufacturing facilities, R&D centers, and dealerships. American-built cars made by companies from General Motors to Toyota represent the biggest chunk of U.S. exports to the rest of the world, accounting for $137 billion in vehicles and parts shipped abroad. Trade and the global economy are intertwined with America’s auto retail industry and its economic success. And yet, that message is easily lost in sound bites and campaign slogans. I’m still shocked by the anti-trade dogma that I encounter in my work both inside the beltway and around the country. The truth is: trade IS good for American manufacturing, Amer- ican workers, and American consumers. Our industry and your own dealership are a testament to the role it has played in moving our economy forward. Need more evidence? Take a look back at NAFTA’s key automotive tenets and what they have helped our industry achieve over the last 25 years. Among other things, NAFTA reduced or eliminated certain problematic tariffs, making it possible for automakers to increase the number of manufacturing facilities they operate in the U.S., Canada, and Mexico. According to a June 2017 study by the Center for Automotive Research, without NAFTA, many parts of the U.S. auto industry would have been forced to relocate to low-wage countries outside North America. Since NAFTA took effect, manufacturers have built 14 new facilities in the U.S. alone. Today, the U.S. auto industry manufactures more than 12.2 million vehicles right here at home – an increase of more than one million vehicles compared to the year before NAFTA took effect. The agreement also included the highest automotive origin requirement of any U.S. trade agreement, tripling the exports of U.S. parts suppliers to Mexico. Similar exports to Canada also increased by 43 percent. Thanks to a dramatic increase in the auto industry’s U.S. foot- print since NAFTA took effect, auto-related jobs have also gone up in our country. International automakers alone have doubled their direct American employment. Motor vehicle parts suppli- ers directly create 871,000 jobs in the U.S. – a number that has increased 19 percent since 2012. Dealership employment has also benefited from our industry’s health; today, more than 16,700 new car dealerships across the U.S. support 1.6 million jobs. In New Jersey alone, 530 dealerships provide employment to more than 37,000 people – an average of 74 people per dealership. Perhaps most relevant to New Jersey’s dealers is the importance of NAFTA and the global economy to the consumers you serve. A recent Ritholz Wealth Management study found that while many parts of the U.S. economy–like housing, food, and beverages–went up for American consumers between 1997 and 2017, the price of new vehicles, in fact, went down. This matters a great deal to dealers, who guide consumers through the largest purchase in their households outside of buying a home, and it is due in no small part to NAFTA. The agreement built on the interconnected nature of the global auto industry, enabling automakers to enhance their supply chains and build more vehicles for the North American market, including U.S. dealer lots. And, it has made them available to American consumers at better price points. Without NAFTA, vehicle costs would increase and overall U.S. auto sales would decrease–both of which would be bad news for auto retailers. NAFTA is only one part of the broader trade picture, but it shows why the principles of global trade are so pivotal to New Jersey’s community of auto dealers, and others like you all over the coun- try. I know all dealers are heavily invested in creating a positive environment to do business with America’s consumers. If you’re not paying attention to trade and the NAFTA debate, you’re ig- noring a key piece of the puzzle that is supporting your business. Although it’s been almost 50 years since that inaugural group of Volkswagen dealers met to address the threat that U.S. trade policy posed to their businesses, it’s clear from today’s NAFTA debate that this same issue is still a very real threat for America’s auto industry. AIADA is part of a groundbreaking coalition of automakers, parts suppliers, and auto trade associations that have banded together to make the case for why the agreement matters and why key tenets of it must be preserved if the American auto industry is to keep moving forward. You can find out more about the Driving American Jobs coalition, and join with us, at Driv- ingAmericanJobs.com. Cody Lusk is President and CEO of the American International Automobile Dealers Association (AIADA). He can be reached at 800.462.4232. America’s Auto Industry Depends on NAFTA BY CODY LUSK