More Cars Made in Mexico -- WSJ
July 26 2017 - 3:02AM
Dow Jones News
By Mike Colias and Chester Dawson
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 26, 2017).
The "Made in Mexico" label has become more plentiful on American
car lots this year, even as auto makers pressured by President
Donald Trump began 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
competitors 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 an 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 start 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 whether a car is built in America.
Finding those cars is getting harder.
Pickups such as some versions of Fiat Chrysler'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 moved some production of a revamped version of its popular
Chevrolet Equinox crossover SUV to Mexico from plants in the 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, where year-to-date production is up
177%, according to WardsAuto.
FCA said it is "in the process of realigning its U.S.
manufacturing operations to respond to a shift in demand from cars
to trucks and SUVs, " adding the company plans to ramp up
production at U.S. plants over the next several months.
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 other models -- the Jeep Patriot and Dodge Dart --
were canceled. That plant has been retooled for production of the
Jeep Cherokee midsize SUV, which began in June after being shifted
from a Toledo facility.
Corrections & Amplifications FCA has canceled the Jeep
Patriot and Dodge Dart and moved production of the Jeep Cherokee
midsize SUV to its Belvidere, Illinois factory. An earlier version
of this article incorrectly said all three were new models. (July
25)
Write to Mike Colias at Mike.Colias@wsj.com and Chester Dawson
at chester.dawson@wsj.com
(END) Dow Jones Newswires
July 26, 2017 02:47 ET (06:47 GMT)
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