US Auto Manufactures to Shift More Production to Mexico

Detroit’s Big Three automakers are accelerating plans to produce more small cars for the North American market in Mexico as they seek to reduce labor costs, while using higher-paid U.S. workers to build their very profitable trucks, sport utility vehicles and luxury cars.

New versions of several of their popular U.S. compact cars are expected to be made in Mexico, people familiar with the companies’ plans said. They include General Motors Co’s new Chevrolet Cruze hatchback, a successor to Ford Motor Co’s Focus compact and a replacement for Fiat Chrysler Automobiles NV’s Jeep Compass compact SUV.

The decisions are prompting three major automotive research firms, who are often used by the automakers and their suppliers for industry forecasting, to project a big increase in Mexican output of small cars by the three companies.

AutoForecast Solutions estimates that GM, Ford and Fiat Chrysler will collectively produce 45 percent of their small cars for the North American market in Mexico by 2020, up from 18 percent in 2014. LMC Automotive sees the 2020 figure at 37 percent, also against 18 percent last year, while IHS Automotive projects the Mexican percentage going to 42 percent in five years time, though it calculates the 2014 level at a higher level than the others, at 25 percent. In response to questions from Reuters, the three automakers declined to discuss their specific plans.

via Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.