Detroit, Michigan - 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. GM said 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."Read more at Reuters.com