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Why This US Senator Is Drawing a Hard Line on China | NY Auto Forum · Auto Collabs

• 0:00
  All right, we are here at the Auto Forum New York, and we are with none other than Bernie Moreno. Thanks for spending a little bit of time with us today, and, uh, welcome to the show.
• 0:07
  Hey, it's always a great place to be, talking about cars, talking about car people. It's a lot better than just talking about, uh, good old-fashioned boring politics. This is great.
• 0:14
  Yeah, the good news is that the last year has basically had nothing for you to do, so I know you're super tired- Boring... of it. Boring.
• 0:20
  Um, you know, uh, s- so much of the conversation has shifted from everything about EVs last year to, uh, everything about global politics this year.
• 0:29
  And, and that is really putting pressure, especially with Mexico and Canada starting to have these conversations with the Chinese.
• 0:36
  We were talking to John Bozzella earlier about just the fact that President Trump is gonna be visiting China, uh, in about 45 days.
• 0:43
  How are those conversations in your world kind of unfolding and, and, and impacting the way that you're communicating with dealers today?
• 0:49
  Well, befo- look, before we talk about that, it's really important to just take a pause and recognize what we were able to get done last year.
• 0:56
  Uh, California can no longer set a different emissions standard for the rest of the country. That's a big fricking deal. That's a big deal. I mean, y- huge deal. We saved the US auto industry by doing that.
• 1:06
  The second thing we did is we, we got rid of the distortion in the marketplace that existed because of government, meaning the $7,500 EV subsidy, the mandates, all that's gone.
• 1:16
  Those two combinations, one federal standard and no more market distortions by EVs, is a big deal.
• 1:23
  Now, look, there's a price to be paid, and it's probably gonna approach $100 billion that car companies are gonna take that shot.
• 1:29
  Sadly, we could have used that $100 billion to develop better technology, more innovation here in America, because we have a giant monster. This is, like, out of, uh, some sort of a sci-fi movie.
• 1:41
  We got this gigantic monster rising from China that was built to destroy the Western auto industry. So what I'm working on right now is a very simple piece of legislation.
• 1:51
  Uh, there is never gonna be a scenario hermetically sealed forever and ever that you will not have a Chinese vehicle in the United States market.
• 1:59
  I'm hoping that then Canada and Mexico adopt the same thing, Latin America and, and Europe, so that China goes back to saying, "Hey, why don't we build cars for domestic consumption?"
• 2:09
  Remember, they're still the largest car market on Earth. They don't need to be building, uh, 75% excess capacity with the intention of being, destroying the Western auto world.
• 2:17
  So that's my number one legislative priority this year. Well, that seems... Okay, so what you just said seems counter to the narrative we've been hearing from China.
• 2:26
  Well, even in observation, we look, they have way more capacity than they can use domestically.
• 2:31
  How are we going to draw some lines that make them rethink their approach, especially when it feels like the walls are closing in with Mexico and Canada? Hermetically sealed. That's gonna be the US market.
• 2:41
  That's a great- You can hermetically seal... And by the way, I'm talking about software, I'm talking about hardware, I'm talking about joint ventures, I'm talking about being able to import cars from other countries.
• 2:51
  You will not see a Chinese car on our roads. You cannot allow that to happen because our industry would collapse.
• 2:56
  You gotta remember, the amount of overcapacity, it's not just capacity, it's subsidized capacity, subsidized labor, subsidized energy, subsidized industries.
• 3:05
  You have 94 brands there in China which are going to a race to the bottom to kill each other. Well, in that process, who gets sucked up in that death is the Western auto industry.
• 3:15
  Then you'd- then from the ashes, the phoenix would be basically one or two or three Chinese auto companies that would rule the wor- the world auto industry. That, that's about a hit of about 10% of our GDP.
• 3:26
  Can't, k- you can't just say, "Well, we're gonna give up on 1/10 of our GDP." That's jo- that's tens of millions of jobs. Regardless of what the industry is. Regardless of what the industry is.
• 3:35
  And that's tens of millions of good, high-paying jobs, especially in my state, Michigan, the Midwest. We're just not gonna let it happen.
• 3:41
  Uh, China's gotta retreat back to their borders and say, "Look, we have a giant auto market. We gotta satisfy that demand. We're not gonna continue to subsidize these industries at that level."
• 3:50
  And that's their plan, and we just w- we're not gonna be stupid like Canada. Like I said, that if Canada can be judged on a stupidity scale, they won the prize.
• 3:58
  Why would you let that door open knowing that they have a challenge because of domestic content requirements? You're gonna see less final assembly in Canada.
• 4:07
  So they should take those auto plants and make sure that it feeds their domestic supply instead of sending China. Why do you think they say yes to what they say yes to?
• 4:13
  You know, I think it's a reflective, uh, "Look, we're gonna show Trump this." It's just bad chess moves. Uh, it, it- there's literally, uh, cutting your nose off to spite your face. Uh, Mexico is further ahead in that.
• 4:24
  Mexico did put in place tariffs.
• 4:26
  Uh, they're not high enough, but what they did, which is interesting, I'll just say that word, they put a tariff of 50% in against Chinese automobiles and then subsidized the cars on the other side. [laughs] Wild.
• 4:38
  Really? [laughs] Oh, yeah. So 50% tariff with a subsidy if it's an EV. So what happened? Well, well, you, uh, you took money out of your left pocket and put it in your right pocket. And that's still active right now?
• 4:46
  Still active right now. So look, my call to the Western world, so again, Latin America, US- the USMCA region, Europe, let's all stand together, one set of common st- uh, uh, uh, adopting each other's standards.
• 4:58
  We have a good trade relationship now, an integrated supply chain, which is good, and let's make certain that we together unite against, uh, the one common problem, which is Chinese overcapacity.
• 5:09
  And that's what we're working on this year. Now that we got rid of CARB and we got rid of this market distortion, and we took this $100 billion. It's a lot of money, right? It's a lot of money.
• 5:16
  Even for somebody in government, $100 billion is a lot. Even so. [laughs] Right? A- and what, again, what you could have used that money for. Think about the innovation that's required to make cars more affordable.
• 5:26
  That's what we should be focused on, is spending the money. How do we make cars more affordable so that working Americans can afford a new car? That's what we should be focused on.
• 5:34
  Let's pivot a little bit to the ground level.
• 5:36
  The conversation with the FTC enforcement over the last month, um, is something that seems like the administration is pushing, but al- also the FTC is saying, "Hey, look, we're gonna take care of the consumer, but also we're gonna put the dependence on the dealer and their tech partners in making sure that we provide transparency as a market."
• 5:52
  As a, as a dealer yourself formerly and, and also one that communicates with dealers a lot, what's your communication in line with that, and, and how are you encouraging de- dealers to approach what is coming down the pipe?Ask your mom if the ad makes sense.
• 6:05
  [laughs] That's not great. Senator, right? Yeah. Meaning, meaning, like, you're advertising a car, but you need to be in the military, a GM employee, a, somebody who's a member of Sam's Club.
• 6:16
  You have to buy five finance products. You have to have an 800 FICO score, and then you get the price for that print. Would your mom approve, or would your mom say, "Hey, that's a little deceptive"? Mm-hmm.
• 6:24
  And, and look, if we don't do it now ourselves with an industry-led cleanup, a final cleanup, by the way, because the industry's mostly incredibly professionalized. Absolutely. Very, very professionalized industry.
• 6:34
  Let's clean out the bad players ourselves as an industry so we don't get collective really bad punishment in a future administration. So Andrew Ferguson's a friend, a great guy, uh, chair of the FTC.
• 6:45
  We're gonna work together to say, "Let's put together a uniform rule standards. Dealers understand. It's transparent. We know exactly what you can do and what you shouldn't do." And honestly, most of it is common sense.
• 6:57
  Like, you, you should be able to advertise a car, and somebody can go in and buy it. The, the example I use, this is a true story.
• 7:03
  Back in the '70s, there were dealers that would take a white car and put red doors on them, and that would be the ad car that you advertise. Person would go, "What do you mean? I don't want a white car with red doors."
• 7:13
  "Oh, well, you want the white car with matching doors?" "Here's the price for that one." "Well, the car's... This is the price for that car." No way. That's crazy, right? Like- In the '70s?...
• 7:19
  tho- th- those are the kinds of things that- The final common sense... were, back in the day, this was a Wild, Wild West industry that was not very professional. We've come a long way.
• 7:27
  Well, the, the, the- Just final cleanup. That's the prevailing narrative, but, but the reality is, on the ground, that's not the, that's not the case. And like you said, it's the final cleanup.
• 7:34
  It's a percentage of dealers that need to not, that need to be pushed out, honestly. Absolutely.
• 7:39
  Look, uh, I think most good, sophisticated dealers don't like to compete with those kind of dealers because let's say that you and I have a relationship. You're a customer, and I sell you a car.
• 7:48
  And you pay, I don't know, $400 a month for it, and then you take delivery. And of course, you know customers. That's when they really shop- Yeah... is right after they, they take delivery. Then they see an ad.
• 7:57
  It's $200 a month. What would be your immediate gut reaction? I got ripped off. Oh, yeah. Got ripped off. Absolutely. You destroy that relationship. And by the way, they're not h- you know what they're hearing?
• 8:04
  Charlie Brown's teacher- Yes... when you explain to him, "Well, it's, it's not really true," da, da, da, da, da, da, da. It's complicated. Right. Right? You- It shouldn't be... you didn't qualify for this incentive.
• 8:11
  They're using a finance incentive on a lease payment. Customers, you ruin these relationships. You burn it down. Look, we should compete on our ability to deliver great client service. Yeah.
• 8:22
  The price that you see is the price that you'll pay. Uh, we gotta clean up the final, final 5% of the industry, and I think we're gonna work with the FTC to get that done. It'll be the best thing we do for car dealers.
• 8:32
  Amazing. All right, final question. Um, I had it. I had it. Now it's gone. The final question. How do I stay looking so young? Well, I was- [laughs]... gonna say, what's your sleep regimen?
• 8:43
  [laughs] I- Because I, because I have two kids. I, I'm a big fan of sleep. I'm a big fan of sleep. Okay. It's good. Sleep is good. No, look, at the end of the day, uh, my secret, you ready for this?
• 8:51
  Delete all of your stuff at the end of the day. Uh, you don't hold any grudges. Just delete it all. Ah.
• 8:57
  You w- the only thing you control in life, there's one thing you control in life a- with absolute certainty, is your attitude. And just be happy and optimistic, right?
• 9:04
  We're, look, we're the luckiest people on Earth to get to be born and live in the United States of America. What's better than that? See, I remember my question, but I'm not gonna ask it 'cause- That's- No, no, no.
• 9:11
  Don't ask that question- I don't think so... 'cause that was a freaking closure like a boss... I think that's how we're gonna end this. I'll ask you after this. Amazing.
• 9:15
  [laughs] Senator, thank you as always for- Hey, thanks, guys... for fighting the fight. Thank you so much. Keep pushing. Yeah. Thank you, guys. Absolutely. Give us a few minutes. Appreciate it. Talk to you soon.
• 9:21
  Thanks, guys. Thank you.