Industry's mood turns anxious

Hanging up a new calendar should bring a sense of optimism about the year ahead, but the mood around the auto industry is wary and anxious.

With 2018 in the books, there should be plenty of reasons to feel good: U.S. vehicle sales remained above 17 million for a fourth straight year, and even grew a little, without the industry slathering vehicles with profit-sapping discounts or dumping unsellable cars into daily-rental fleets. Profits stayed strong last year, and while interest rates are ticking up, there are plenty of tailwinds — low unemployment, affordable fuel, confident consumers — to keep sales and profits robust for another year or longer.

And yet, paranoia abounds.

Some of the anxiety is tied to automakers' newfound discipline. GM's downsizing moves — lambasted in Washington circles and beyond — reflect the kind of foresight that has helped preserve North American profits as sales plateaued. That's great for investors, but many people who work in the industry associate with frustrated factory workers and imperiled salary folk. And disarray within the UAW — while Canada's Unifor is already threatening widespread disruption — raises the prospect of the most contentious contract negotiations in two decades.

There's also a sense that if union politics doesn't sabotage the industry, Washington's might. Donald Trump's presidency has been turbulent enough, with metals tariffs, trade wars, Fed-lobbying-by-tweet and three federal government shutdowns in 2018 alone. Now, facing a House of Representatives under pressure to consider impeachment, and with many of his moderating influences out the door, the president could be even more inclined to rattle the industry as his footing shifts with the demands of his base.

Political turmoil already spurred the worst December for U.S. stocks since the Great Depression. Of course, the stock market isn't the real economy, but that kind of swing in valuations can make the affluent consumers who buy new SUVs feel a little less flush, and a little more cautious about committing to another big-ticket purchase.

The industry has more phases to it than boom and bust, including some that are tough to prepare for. The current sales plateau is producing profits, but also anxiety. It's better than losing money, but it still doesn't feel very good.

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