As they plan to cut labour costs, GM, Ford and Fiat Chrysler aim to move some of their small cars production in Mexico.
General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV’s, the three auto-giants from Detroit, are planning to move some of their smaller cars production from North America to Mexico, for cutting some of the labour costs. The pricier models with high demand, that bring bigger profits, will remain at their US plants. Therefore, it is expected for the new Chevrolet Cruze hatchback, the next generation of Ford Focus and the Jeep Compass replacement to be built in Mexico, according to people familiar with the companies’ strategy.
Under these circumstances, major automotive research firms are forecasting an important boost in Mexican production by the three automakers. AutoForecast Solutions projects that GM, Ford and Fiat Chrysler will produce 45 percent of their small cars for the North American market in Mexico in five years’ time, up from 18 percent in 2014. LMC Automotive believes a 37 percent is more plausible, while IHS Automotive estimates a 42 percent by 2020.
Questioned by Reuters about their plans, the companies did not want to disclose their future intentions regarding the shifting of small cars’ production. GM has limited to say that the “vast majority” of its small cars sold in the U.S. are “produced domestically.” Ford said it is “committed to continuing to improve competitiveness and to invest where it makes the best sense for our business.” Fiat Chrysler said it “has made no official announcements regarding the company’s future production plans.”