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Trump a ‘game changer’ for auto industry, CEO says

Fiat Chrysler CEO Sergio Marchionne warned in June that a Trump victory could affect the car maker’s production options in North America.


U.S. president-elect Donald Trump's critical stand toward free trade could affect Fiat Chrysler Automobiles NV's business in North America, according to the Italian automaker's chief executive officer Sergio Marchionne.

Mr. Trump's election "certainly is a game changer, mainly because I think that there are a number of conditions in the U.S. which are not yet spelled out," Mr. Marchionne told Bloomberg Television at an Alfa Romeo plant in Cassino, Italy. Statements Mr. Trump has made about trade are "a big issue" because of the North American free-trade agreement's impact on Fiat's operations in the United States, Mexico and Canada.

Mr. Trump frequently slammed NAFTA during his campaign, describing it as the worst deal ever and blaming it for U.S. job losses. He has singled out Ford Motor Co. for making cars in Mexico and has called for imposing a 35-per-cent tariff on products made by companies that move their production from the United States to other countries. Since 2010, nine global auto makers, including General Motors Co., Ford and and Fiat have announced more than $24-billion (U.S.) in Mexican investments.

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Fiat, which generates the lion's share of its profits in North America, assembled about 17 per cent of all the vehicles it made in that region in Mexico in the first 10 months, according to Kevin Tynan, a Bloomberg Industry senior analyst. Almost all of those cars were sold in the United States and Canada. "The company would incur hefty costs if the Trump administration is able to enact a 35-per-cent levy on vehicles and parts imported into the U.S.," Mr. Tynan said.

Mr. Marchionne warned in June that a Trump victory could affect the car maker's production options in North America, depending on the way he manages NAFTA and whether he supports protectionist views. The Fiat CEO said he hasn't spoken with Mr. Trump but will work with the new administration.

The change in U.S. leadership is not only affecting car makers' trade prospects. Fiat shares have gained 14 per cent since the election, with a jump three days later after Mr. Trump chose a prominent climate change skeptic to lead his Environmental Protection Agency transition team. That fuelled speculation that the new administration may loosen fuel-economy rules, which would benefit makers of conventional engines. Gains by the U.S. dollar since the election are also positive for Fiat, Mr. Marchionne said.

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