A Clear Trend Emerges - GM Will Import Its New Family Vehicles

[Gorehamj]

John Goreham
Contributing Writer, GM-Trucks.com
6-12-2019

We've recently reported on two major investments by General Motors in its American manufacturing plants. We have also recently reported on GM's closing of five North American plants. Why is GM investing in some plants, while closing others? Obviously, GM considers this to be a good business decision, but what is becoming pretty clear is that GM will be building the high-volume trucks it sells in North America and primarily inside the borders of the U.S., while it shifts to imported crossovers for its high-volume family vehicle models. There are two reasons that underly this shift. 

 

 

Before we get to those two reasons, let's list off the newest family model vehicle introductions by General Motors, and look at where GM has shifted work on other family vehicles.  First up the newbies. The Encore and Envision are two new Buick models that GM introduced over the past half decade. The Encore is imported from South Korea and Mexico. The Envision is imported from China. Next up, GM introduced the Chevy Trax, which is a clone of the Encore. Also made outside of the U.S. GM then introduced the Chevy Blazer, which it builds in Mexico. Most recently, GM has introduced the new Encore GX and Chevy Trailblazer. There are derivations of the Encore with more space. They are also imported. GM also shifted the manufacturing of its Chevy Equinox and GMC Terrain from Canada to Mexico. These models make up the bulk of GM's non-truck sales volume. 

 

 

There are two main reasons why GM has shifted its family vehicle business away from the U.S and Canada. Cost and import duties. On the cost side, GM's plants are among the most expensive to operate. This is partly due to the United Auto Worker's successful wage and benefit gains over the past half-century.  These workers earn a bit more than the non-union workers who build Hondas, Toyotas, and Nissan inside of the U.S. However, they earn dramatically more than the workers in Mexico, China, and other overseas markets. Other reasons that plants inside the U.S. are more costly to operate than plants in China and Mexico are taxes, environmental costs, and safety costs. 

 

 

The same unions represent workers who build GM's trucks in expanding American plants. However, trucks are protected by a 25% import duty, and that tariff had nothing to do with President Trump. It was promoted by President Kennedy as far back as 1962 and was implemented by President Johnson in 1964. The official name of the order signed by Pres. Johnson, and kept in place by every president since (both Democrat and Republican) is Proclamation 3564. Because of this 55-year-old tariff, hundreds of thousands of American workers have jobs building trucks and parts for trucks. The North American Free Trade Agreement allows GM and other truck makers to build trucks in Canada and Mexico if they so choose without paying the import duty, and most have truck manufacturing operations in those countries to some degree. However, a long-running but fading sentiment in America to buy American has helped influence where the plants are located. 

 

 

There is no tariff that protects crossovers in this fashion. America does have small import duties on vehicles from some countries, but none are double-digit duties like the 25% on trucks. This is why GM is shifting its high-volume family vehicle production and jobs to cheaper markets. It is not alone. Ford builds its new EcoSport crossover that replaces the Focus in India. Jeep's Renegade and Fiat's 500X are imported from Italy. The new Jeep Compass crossover is made in Mexico. Interestingly, the Honda CR-V, Nissan Rogue, and many other "foreign brand" top-selling crossovers are built in America. In non-UAW plants. 

 

Top of Page Image Note: GM CEO Mary Barra shakes hands with UAW President Dennis Williams.  

[Colossus]

From the excellently written article:

There are two main reasons why GM has shifted its family vehicle business away from the U.S and Canada. Cost and import duties. On the cost side, GM's plants are among the most expensive to operate. This is partly due to the United Auto Worker's successful wage and benefit gains over the past half-century.  These workers earn a bit more than the non-union workers who build Hondas, Toyotas, and Nissan inside of the U.S. However, they earn dramatically more than the workers in Mexico, China, and other overseas markets. Other reasons that plants inside the U.S. are more costly to operate than plants in China and Mexico are taxes, environmental costs, and safety costs. 

 

However, a long-running but fading sentiment in America to buy American has helped influence where the plants are located. 

_______________________________________________________________________________________________________________________________________________

 

So essentially- You are damned if you do, and damned if you don't.    "I want to support American products and workers" means supporting higher costs and all that jazz.   So, what are you going to do?  This is no longer a national economy.. it is a global economy.  Like it or not. 

[SWOYER]

 

 

1

4 hours ago, Colossus said:

So essentially- You are damned if you do, and damned if you don't.    "I want to support American products and workers" means supporting higher costs and all that jazz.   So, what are you going to do?  This is no longer a national economy.. it is a global economy.  Like it or not. 

These days, you buy what makes sense for you and the seller will be forced to meet demand or die. Or, nothing will happen because others don't see it your way. Either way, make the best choice for you. 

[KARNUT]

I try to buy what’s made here. The reason to keep the U.S. strong should be obvious. Some people are putting a lot on the line to do that. I try to do my part.


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[Sierra Dan]

If you want to keep me and some others totally happy....  produce the parts here in America as well.

Most of our GM parts are made in Mexico now days.

Probably explains why the Condensers, Vacuum Pumps, Radiators and other major components are failing in our K2 trucks.

[MaverickZ71]

"GM will import all of its family vehicles."

 

For a while, anyway.  Until a conservative administration like Trump's convinces them otherwise.  Or until the American public figures out that GM's non-existent quality control combined with overseas factories means that critical parts will be on backorder for a year or more instead of 'just' 4-6 months.  

 

Mary Barra and Co., like most automakers these days, are hell-bent on globalism, but they are behind the curve on this one.  Since Trump was elected, the world has taken notice, and an ever-increasing number of the free-world's elected leaders are now nationalists, moving away from globalism, regardless of how much money George Soros spends to try to elect socialists around the world.  

 

Besides, if you go to any town in America, and stop 10 people on the street to ask them what make of import vehicle they would buy, GM wouldn't be their answer.  It would be an Acura, Alfa Romeo, Aston Martin, Audi, Bentley, BMW, Bugatti, Genesis, Honda, Hyundai, Infiniti, Jaguar, Kia, Lamborghini, Land Rover, Lexus, Maserati, Mazda, Mercedes, Mini, Mitsubishi, Nissan, Porsche, Rolls, Smart, Subaru, Toyota, VW, or Volvo instead. 

[KARNUT]

"GM will import all of its family vehicles."
 
For a while, anyway.  Until a conservative administration like Trump's convinces them otherwise.  Or until the American public figures out that GM's non-existent quality control combined with overseas factories means that critical parts will be on backorder for a year or more instead of 'just' 4-6 months.  
 
Mary Barra and Co., like most automakers these days, are hell-bent on globalism, but they are behind the curve on this one.  Since Trump was elected, the world has taken notice, and an ever-increasing number of the free-world's elected leaders are now nationalists, moving away from globalism, regardless of how much money George Soros spends to try to elect socialists around the world.  
 
Besides, if you go to any town in America, and stop 10 people on the street to ask them what make of import vehicle they would buy, GM wouldn't be their answer.  It would be an Acura, Alfa Romeo, Aston Martin, Audi, Bentley, BMW, Bugatti, Genesis, Honda, Hyundai, Infiniti, Jaguar, Kia, Lamborghini, Land Rover, Lexus, Maserati, Mazda, Mercedes, Mini, Mitsubishi, Nissan, Porsche, Rolls, Smart, Subaru, Toyota, VW, or Volvo instead. 

Some of those you mentioned are built here, in the south mostly.


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[MaverickZ71]

5 minutes ago, KARNUT said:

Some of those you mentioned are built here, in the south mostly.


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True.  But most of the American car-buying public has no clue about any of that, and those people still think that GM/Ford/Chryslers are built in America and everything else is an import.  Or some will say that even if the Toyota factory is in Alabama, the $ goes back to Japan, so it's a 'foreign' vehicle.    

 

For instance, on this very forum, in the last couple of weeks, a guy posted about how upset he was when he found out that his new 'American truck' from GM was made in Mexico.    

[KARNUT]

True.  But most of the American car-buying public has no clue about any of that, and those people still think that GM/Ford/Chryslers are built in America and everything else is an import.  Or some will say that even if the Toyota factory is in Alabama, the $ goes back to Japan, so it's a 'foreign' vehicle.    
 
For instance, on this very forum, in the last couple of weeks, a guy posted about how upset he was when he found out that his new 'American truck' from GM was made in Mexico.    

I’m more attentive to where their built than were the profit goes. Even American owners park profits overseas. Of course that’s changing now too. Smart people know why.


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[swathdiver]

Those jelly bean shaped cars are looking more and more like the competition and less unique IMO.  We buy American for a reason GM, because we want cars built by Americans not by slaves in socialist countries.

[Imcrazy]

Kinda pisses me off... I have two Chevy's in my Garage, the Equinox was made in Mexico my Silverado was made in Indiana... I like the vehicles but, I wish I could get a 100% made in USA vehicle... I am happy to buy imported products if they offer a unique value proposition but, I hate buying cheap imported stuff just because it's cheap... I also hate buying from countries that don't treat their workers well but, when you're paying a union guy 70k a year to build cars, I can't blame GM for what they're doing...

[i82much]

If you really want a vehicle that was made in America, buy a 55 Chevy.

[silveradosid]

if everything was still american or made in canada , the only people that could afford these vehicles would be the workers for the big 3 because of their well above average wages. americans and canadians used to be proud to say i built your car or truck, now they have to wonder how much longer will they have a job

[HondaHawkGT]

It's a common theme across the whole industry right now. Even brands like Toyota, that some many people think are "more American made" than the domestic brand vehicles, are investing in production plants in Mexico right now. Most Tacoma's sold today are imported from Mexico. Toyota has been threatening to move Camry production back to Japan because tariffs and other increased expenses of manufacturing in the US have made it cheaper for Toyota to build them in Japan. Honda is a unique exception but the auto industry changes quickly, so who knows how long they stay in the US.

[Paintor]

Critical components of the F35 fighter were built in the Red White and Blue...of China.

 

Rich folk are ridin their money wave off of humans an Alien Species would classify as having NO intelligence..

 

Unless we were outta OIL an trickin countries to make us crap for what the US Treasury Printing Press keeps printin out...then the Aliens would be laughing.