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Production of U.S. cars ramps up in Mexico

July 28, 2017
The "Made in Mexico" label has become more plentiful on American car lots this year, even as automakers pressured by President Donald Trump began the year with promises to create more jobs in the U.S.
A move by automakers to produce some popular sport-utility models in Mexican factories helped spur a 16 percent 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
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 and Fiat Chrysler. 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.
The president 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, automakers have committed to several initiatives, including a move by Ford 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 show that U.S. light-vehicle manufacturing fell 5 percent during the first six months of this year from a year earlier, as automakers 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 percent through May.
United Auto Workers President Dennis Williams told reporters in mid-July 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. 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. automaker 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 percent, 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 percent 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.