Big Three Go Long On SUV, Truck Production in North America

Aaron Cole
by Aaron Cole
big three go long on suv truck production in north america

Detroit automakers may be betting high-profit SUVs and trucks are a better fit for their domestic plants as those automakers shift production away from cars to make room for larger, high-margin vehicles.

Ford and Fiat Chrysler Automobiles will largely shift production of their cars to Mexico and bring more trucks and SUVs to North American facilities, according to their contracts with the United Auto Workers, Automotive News reported.

The report consolidates production planning schedules included in UAW contracts with domestic automakers, which shows automakers’ plans to move some of their cars to Mexico or overseas. Of the Big Three, General Motors will sell the most domestically produced cars in North America, including the Malibu, Impala, Sonic, Bolt and Volt, although the small-car plant recently announced a slowing production schedule. Ford will still produce the Mustang and Fusion at its Flat Rock plant in Michigan.

The shift represents a significant departure for the automakers who moved production of cars into the U.S. after 2000 to insulate themselves from massive SUV slowdowns due to rising fuel costs.

According to Ford’s contract with the UAW, production of the slow-selling C-Max hybrid and Focus will head to Mexico in favor of a new truck (likely Ranger) and SUV (likely Bronco) at its Wayne, Michigan facility. Union workers at that plant voted overwhelmingly in favor of the four-year contract with the automaker, in part, because of that plant’s gain of a high-margin truck and SUV.

Ford’s chief U.S. sales analyst Erich Merkle told Automotive News the automaker’s improved SUVs and worldwide sales could offset any sudden rise in gasoline costs in North America, which burned the automakers last time around when they bet heavy on SUV sales.

“The SUV has evolved dramatically over the last 15 years, and that’s really helped to keep it at the forefront,” Merkle told Automotive News. “SUVs are actually a growing segment not just in the U.S. but when you look to Europe and parts of Asia and China. It’s a worldwide growth story.”

The automakers have introduced smaller, more fuel efficient SUVs to offset a possible rise in energy costs and sales of crossovers of all sizes have surged. According to our own Tim Cain, best-selling midsize sedans have slumped by 1 percent so far this year compared to last year. However, best-selling compact crossovers, such as the Honda CR-V, Toyota RAV4 and Ford Escape, have surged by 13 percent, year-over year. Last year, sales of full-size sedans slumped 8 percent from 2013.

That sales trend has so far been reflected in future production of cars by the Big Three. In its deal with the UAW, Ford signaled that it would likely end production of the Taurus in America and fill that void at its Chicago facility with the Lincoln MKC crossover.

FCA is expected to shift production of its Chrysler 200 and Dodge Dart to Mexico and build more Jeep Wranglers and Wrangler-based pickups at its Toledo facility as part of its deal with the UAW. Jeep is likely to build a three-row crossover, likely a Jeep Grand Wagoneer, in the U.S., and last month FCA chief Sergio Marchionne hinted that the company would study a Ram-based, full-size SUV.

According to Automotive News research, the cars that Ford and FCA are moving out of the U.S. — combined with the Buick Verano, which is expected to move to Mexico or China — account for 45 percent of the Big Three’s domestic car production in the U.S. so far this year.

Automakers such as Toyota, Honda, Subaru and Nissan are expected to keep production of many of their cars in North America. Toyota was rumored to move Camry production to Canada after announcing its decision to move Corolla production to Mexico. However, Toyota recently announced it would expand production of RAV4 in Canada, possibly quelling the Camry rumor. Last month, Honda started production of its Civic in Ontario and Indiana and Subaru will build its Impreza at its Indiana plant.

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  • Big Al from Oz Big Al from Oz on Nov 17, 2015

    The Big Three are reliant on the sheltered pickup truck market in the US. So having the US produce the full size pickup in the only real market for them shouldn't surprise many, then add the protection offered. SUVs/CUVs, a similar story, especially the larger ones, except they don't have the same protection. But, is it worth from a logistical perspective to move all of the large SUV part around the globe? The US will keep it's large vehicle production, until the next oil price shock. Then the US will have little. Australia found this out when the consumer became more interested in smaller vehicles and CUVs. Ford and Holden just couldn't compete.

    • See 4 previous
    • RobertRyan RobertRyan on Nov 18, 2015

      @Big Al from OZ The Falcon it was based on WAS the 2nd best selling Vehicle and was making a profit. Territory was OUTSELLING the Japanese SUV's at one point and making a profit. Ford's current imported products , including the locally designed, Ranger can only dream of doing that now. Ford is in big trouble here, but they saw value in the design, development and testing aspect of Ford Australia and have massively expanded those facilities.for developing future Ford Global products

  • Olddavid Olddavid on Nov 17, 2015

    Can anyone explain to me how Germany, with higher labor costs, still produces small cars at a profit? This "we can't do it" mea culpa is bullshit. The UAW is becoming as clueless as its' overseers.

    • See 4 previous
    • RobertRyan RobertRyan on Nov 18, 2015

      @OldDavid The UAW is becoming a hindrance in the US as well. Somehow it bargains for lower wages than what the transplant workers are getting in the Southern US States., bizarre

  • Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
  • Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
  • ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
  • ToolGuy Presented for discussion: https://xroads.virginia.edu/~Hyper2/thoreau/civil.html
  • Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?
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