More U.S. Cars Are Being Made in Mexico
July 25 2017 - 5:59AM
Dow Jones News
By Mike Colias and Chester Dawson
The "Made in Mexico" label has become more plentiful on American
car lots this year, even as auto makers pressured by President
Donald Trump kicked off the year with promises to create more jobs
in the U.S.
A move by auto makers to produce some popular sport-utility
models in Mexican factories helped spur a 16% increase in
production of light vehicles in Mexico during the first six months
of the year compared with the same period in 2016. At the same
time, tepid sales of sedans held down production in the U.S. and
Canada, according to new data posted by WardsAuto.com.
The data indicates one in five cars built in the North American
Free Trade Agreement zone comes from Mexico, including hot new
products from General Motors Co. and Fiat Chrysler Automobiles NV.
That is up from the industry's reliance on Mexico during the
financial crisis, when the U.S. car business received billions of
dollars in bailouts aimed at preserving jobs and keeping domestic
players afloat.
Mr. Trump launched several attacks on Mexican car imports
throughout his campaign and after his election, saying more
auto-factory jobs should remain in the U.S. Since then, auto makers
have committed to several initiatives, including a move by Ford
Motor Co. to scrap a new assembly plant being built in Mexico and
invest some of the money saved in a Michigan factory that will add
jobs. GM and Fiat Chrysler have said they intend to invest billions
of dollars to add jobs in factories in coming years, citing
favorable policies related to tax reform and other issues as reason
for optimism.
The Trump administration in August will kick off new talks with
Canada and Mexico on an overhaul to Nafta. The
vehicle-manufacturing business -- including a sprawling supply base
-- is a central negotiation point.
The latest data from WardsAuto shows that U.S. light-vehicle
manufacturing fell 5% during the first six months of this year from
a year earlier, as auto makers shed workers or scheduled
significant downtime to counter a slowdown in demand for sedans. A
substantial chunk of America's automotive manufacturing footprint
is devoted to production of family cars or compact cars, which
aren't faring well as gasoline prices remain low and sport-utility
vehicles grow in popularity.
Separate U.S. trade data shows that the value of light-vehicle
imports from Mexico to the U.S. ballooned 40% through May.
United Auto Workers President Dennis Williams told reporters
last week that the union is planning to launch a "Made in America"
campaign later this year, an effort to support hundreds of
thousands of members building vehicles or parts in U.S. factories.
Mr. Williams is looking to follow the Trump administration's focus
on American-made products and will use the effort to educate
consumers on how to know if a car is built in America.
Finding those cars is getting harder.
Pickups such as some versions of FCA's Ram and Chevrolet
Silverado, two of the best-selling vehicles in America, are built
in Mexico.
GM and Chrysler this year also started producing small crossover
SUVs in Mexican plants; these are considered important vehicles for
U.S. dealerships because of their growing popularity as consumers
shift away from passenger cars.
GM shifted some production of a revamped version of its popular
Chevrolet Equinox crossover SUV to Mexico from plants in U.S. and
Canada. Over the next few years, the largest U.S. auto maker is
expected to add other new models to factories south of the
border.
Most of Fiat Chrysler's increase comes from a decision to shift
North American manufacturing of the Jeep Compass from the U.S. to
Mexico. An all-new version of that small SUV is being built at
FCA's plant in Toluca, Mexico, which has seen year-to-date
production increase 177%, according to WardsAuto.
Meanwhile output at FCA's factory in Belvidere, Illinois is down
nearly 93% year to date, as production of the older Compass model
has ended and two new models of the Jeep Patriot and Dodge Dart
were canceled. That plant has been retooled for production of a new
Jeep Cherokee midsize SUV, which just began in June after being
shifted from a Toledo facility.
Write to Mike Colias at Mike.Colias@wsj.com and Chester Dawson
at chester.dawson@wsj.com
(END) Dow Jones Newswires
July 25, 2017 05:44 ET (09:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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