Regardless of President Trump’s threats to renegotiate the North American Free Trade Agreement (NAFTA), the Mexican auto industry exported a record number of cars and light trucks to the United States in 2017. Year over year, Mexican exports rose 9.4% to more than 2.33 million light vehicles.
More than 75% of light vehicles built in Mexico are exported to the United States, far more than the 8.6% exported to Canada, Mexico’s second largest market for automobile exports.
Among U.S. automakers, Ford Motor Co. (NYSE: F) had reduced its exports from Mexico by 19.5% in the first 11 months of 2017. General Motors Co. (NYSE: GM) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU) posted big gains in exports, with GM’s 11-month total up 26.3% year over year and FCA’s up by 35.5%.
The big reason for the disparity between Ford and its two rivals is the vehicles each builds in Mexico. Ford builds its Fusion, Focus and Lincoln MKZ passenger cars in the country. U.S. sales of those vehicles are down 15% in 2017, according to a report from CNBC. GM builds some of its Chevy Silverado and GMC Sierra pickups in Mexico, and those were strong sellers all last year. FCA builds its Ram pickups in Mexico.
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In a speech Monday at the annual convention of the American Farm Bureau Federation, President Trump did not repeat his threat to pull out of NAFTA if he does not get the changes he wants. Farmers, generally, like NAFTA because it has opened new markets for their goods, and if Trump scraps the treaty, those markets will be lost.
Like U.S. farmers, automakers have a big stake in what Trump does with NAFTA. At this point, both are probably holding their breath, hoping for the best and trying not to contemplate the worst.
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