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FCA US’ Mexican exposure

by David Zatz on

Sergio Marchionne recently added his voice to industry concerns over the possibility of a trade war with Mexico. What exactly is FCA’s exposure?

saltillo

The company imports two slow-selling vehicles, the Fiat 500 and Ram ProMaster, one medium-seller (the Dodge Journey), and two expected hot sellers: the Ram pickup/chassis cab and new Jeep Compass.  What’s more, every Hemi is made in Mexico.

In the long run, Michigan Ram production is to expand (dramatically); the Hemi can be made in the US, and the Journey is already set to be replaced by a rear drive crossover, likely build in Brampton.

2018 jeep compass trailhawk

The Jeep Compass (now made in the US, but soon in Mexico) will be an issue. If there was a 3% tax on it, it could still do quite well; a 30% tax would be a killer.

As for Europe, the main risk is the VM diesel, popular in the Ram 1500, and made in Italy. The ProMaster’s four-cylinder diesel is made in Europe, and the ProMaster City comes from Turkey (so do the 500L and 500X, but if they were dropped, few would notice). Then there’s the Jeep Renegade, but losses of Renegades would likely be made up in the Compass — except, oops, the Compass is imported from Mexico. Right.

Ram-ProMaster-City-Web

Any changes in trade are unlikely to involve Canada, which makes  the Pacifica, Charger, Challenger, and 300.

Chrysler also buys parts from suppliers, and many of these are made in Mexico, China, and other regions. The impact of that might be lower than some other companies, because the company has already started making more of its own parts within the USA.

Years ago, FCA committed to greater expansion in the US than in Mexico. Parts have been moved out of Mexico, and while ProMasters are made in a new extension to the Saltillo plant, Ram production will be expanded by a much greater margin in Michigan. The company may be better prepared for a Mexican trade war than most of its competitors.

David Zatz founded Allpar in 1998 (based on a site he had begun in 1993-94), after years of writing reviews for retail trades. He has been quoted by the New York Times, the Daily Telegraph, the Detroit News, and USA Today. Before making Allpar a full-time career, he was a consultant in organizational psychology. You can reach him by using our contact form (much preferred) or by calling (313) 766-2304


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