According to the news report by Reuters, the continued shutdown of the American government is threatening to push back the launch of new models of vehicles in the country since mandatory certifications from the Environmental Protection Agency (EPA) are being stalled.
The partial shutdown has now gone on for 34 days, which is the longest the history of the country, and has left more than 800,000 government workers with no pay. This shutdown has also impacted almost every aspect of life in the US, from the release of critical economic data to security screening at airports.
Almost 95% of the EPA’s staff is on furlough. This includes the agency’s laboratory in Ann Arbor in Michigan, which is where emissions data for new vehicle models is reviewed to ensure that they are compliant with emissions laws.
General Motors Co.’s spokesperson Jeannine Ginivan stated that while its has not yet faced any delays in new vehicle launches, it is, like other auto makers in the country, waiting for the EPA’s decisions as part of the certification process for some of its new models that are to be launched in 2019 and 2020.
Other auto makers were not so lucky. Fiat Chrysler Automobile NV’s Chief Executive Officer Mike Manley stated at the Detroit Auto Show that the government shutdown had delayed the final certification of their RAM 3500 heavy-duty pickup truck. The pickup truck segment is one of the company’s most profitable segments, so this delay in the launch of their new truck will hurt revenues.
Ford Motor Co. stated that if the government shutdown were to continue for another 30 days, then some of its new models’ launches were going to be delayed.
Global Automakers, the industry trade group, said that if this shutdown was going to continue the delay in certifications were going to impact auto production across the country.
Stanley Meiburg, the ex-administrator for the EPA, said that these certifications were critical. In fact, it was this certification process that had led to the discovery of Volkswagen’s attempts to cheat on vehicular emissions.
Meiburg also said that auto makers usually try to get their new vehicles certified well before their scheduled launches. This means that if there is a delay in the certification process, then they have a time buffer that will not impact the roll-out dates. However, if this the government shutdown continues much longer, then the issue could become much more serious.
The former administrator stated that disruptions to the certification process would hurt the entire supply chain.
President Donald Trump has stated that unless the $5.7 billion funding for his proposed wall across the US-Mexican border is approved, he will not sign any legislation that would give funding to the numerous government agencies.
The increase in trade tariffs have already hurt the auto industry and the continued government shutdown is going to make it worse, according to leading auto makers.
Fiat Chrysler CEO also stated at the Detroit Auto Show that the metal tariffs imposed by Trump were going to increase production costs for the company by up to $350 million.
The executive vice president for North America’s sales for Toyota Motor Corp. Bob Carter stated that their company had already had to raise prices of its vehicles three times so far because of increasing costs. He said that these tariffs have increased vehicle prices by an average of $600.
General Motors and Ford have also taken cost hits due to the increased tariffs in steel and aluminum. However, GM’s president Mark Reuss stated that these were headwinds and that it was their job to offset such increased costs.