About James Albertine
James Albertine, Senior Vice President of Corporate Development & Procurement at Penske, commented on the auto industry in September 2019. Discussing General Motors, Albertine said he found it "hard to see how" then-President Trump could "legally" remove GM's subsidies, noting that any such action "would take probably sometime" and would face appeals. He described GM's decision to pull out of car production as "many years in the making" and "a when decision," adding that Ford had already made a similar choice. Albertine stated that the move was "in the best interest of GM" and that a lot of autonomous vehicle development "remains in the United States."
In a separate appearance, Albertine said that while auto stocks and valuations suggested a recession, from "the front lines" he did not feel that way, citing "very strong activities" and new SUV and truck products selling "extraordinarily well at record transaction prices." He noted that credit was "widely available" and that the industry did not feel "anywhere near a recession." Albertine also observed that people unable to rationalize a monthly payment for a new vehicle were transitioning to late-model used vehicles, which he said was not a suggestion of a "precipice of a major decline."
Source: AI-verified profile updated from James Albertine's recent appearances.
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Transcript (7 segments)
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James Albertine0:00
Ultimately, I would think this is predominantly related to electric vehicle development. But an indirect comment here is that they're benefiting because foreign imported pickup trucks have a 25% tariff. So they do get a benefit from manufacturing pickups in the US, which is fairly substantial. I don't know if that's what the president is implying here at all, though. We'd have to get a bit more granularity from the company.
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Interviewer0:30
I understand you don't have the numbers right in front of you, Jimmy, but in terms of order of magnitude, what sorts of tariffs is GM receiving for electric vehicle manufacturing? And this is separate from the federal electric vehicle tax credits correct, per car purchased?
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James Albertine0:47
Yes, that's correct. I think at the end of the day, I don't have a percent or an exact dollar for you on the Chevy Volt, for example. But I would think on the order of magnitude of maybe five to ten thousand dollars equivalent per unit in terms of production for EVs specifically. And again, it would be hard to estimate the negative impact if there was ever a removal of truck tariffs. It's hard to understand exactly what is being threatened here in the tweet, but certainly it would put cost burdens on companies already facing cost burdens from fuel efficiency investments, safety, connectivity, and so forth.
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Interviewer1:29
Jamie, it's Tom. Really quickly, if there were to be actions like this taken in the removal of some of these subsidies, the competitive issue comes into play. Who are the most formidable beneficiaries in case GM gets put at this kind of possible hypothetical disadvantage?
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James Albertine1:50
Well, I think in their key segments and key margin drivers, it would be the domestics: Ford and Fiat Chrysler. But it's hard to see how this could be undertaken legally as well. It would probably take some time, be drawn out with appeals and so forth. This would not be something that happens overnight. But where we would be most concerned is where the predominant EBIT margin drivers are for GM, and that's on the pickup truck and utility side.
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Interviewer2:22
This is a broader question though, Jamie. Let's say it's not subsidies, let's say it's something else. Effectively, the president is saying GM, you're in my crosshairs. That's what this move is, isn't it? So there's the move lower in the stock by about three percent. Is that justified for now, knowing that this company is in the president's crosshairs?
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James Albertine2:41
Look, let's take a step back and remember that what GM announced yesterday was many years in the making. In my view, it wasn't an if, it was a when decision. They had to at some point make a decision to pull out of cars. Ford has already made this decision and Ford doesn't seem to be in the same crosshairs. They need to figure out a way to earn their cost of capital through an economic cycle, and we're very late innings in the auto cycle as it stands. So they're obviously signaling with cost pressures they see today and a potential downtick in auto sales perhaps in the 2020-2021 timeframe, in addition to accelerated investments on EVs and AVs. They need to do what they can to right-size their portfolio. I think this is in the best interest of GM and longer term certainly the country. A lot of the AV development remains in the United States. It won't have as many jobs, but certainly very high quality jobs, we would argue. So this really wasn't an if, it was a when decision. It's the best thing for GM in our view.
