If the U.S. auto industry is so worried about a slowdown, why are so many decision-makers suddenly writing checks to invest in assembly plants?
Automakers are thinking beyond the weakening market of 2019 to more robust times ahead.
- Last week found General Motors in discussions with Missouri officials about its plan for a billion-dollar project at its midsize pickup and commercial van plant in Wentzville, near St. Louis. Late last month, GM said it would expand production at its plant in Bowling Green, Ky., by adding a second shift.
- Fiat Chrysler Automobiles in February announced it will invest $4.5 billion in southeast Michigan to modernize several plants and usher in the next phase of Jeep products. The City of Detroit said last week it assembled around 215 acres needed for a key piece of the project: the conversion of the Mack Avenue Engine Complex into a hub for the next-generation Grand Cherokee and a three-row Jeep that potentially could slot below the upcoming Grand Wagoneer.
Toyota Motor North America last week said it will move Lexus NX crossover into production in Ontario, adding it to a $1.1 billion RAV4 project announced there last year. The company also has announced a U.S. manufacturing expansion, committing $749 million in new investments to add about 600 jobs at plants in five states.
- A $1 billion expansion project is underway at Mercedes-Benz's factory in Vance, Ala., for electric vehicle production.
- America Honda said last month that it will suspend the second shift on a line in Marysville, Ohio, to retool it to begin building electrified vehicles.
- Ford Motor Co. said in February that it will spend $1 billion on its plant in Chicago to launch three new utilities there.
Indicators of a North American industry slowdown?
Hardly — despite signs that might suggest otherwise.
April ended with sales of 1,328,649 cars and light trucks, a 2.3 percent decline from a year earlier. In mid-March, credit rating service Moody's cut its outlook for the auto industry from stable to negative, citing a worsening environment for consumer credit. And as of April 1, the U.S. industry was sitting on its largest inventory of unsold vehicles in nearly two years.
But from the looks of the amount of new investment going into North American plants, automakers are not alarmed.
Matt DeLorenzo, senior managing editor for Kelley Blue Book, said manufacturers are looking beyond the current market cycle and making these investments because of the shift to crossovers, SUVs and pickups from cars.
"In the case of GM, yes, they are expanding investments in places like Wentzville but also are closing aging capacity like Oshawa and Lordstown," DeLorenzo told Automotive News, referring to plants in Ontario and Ohio. "Jeep's investment is driven by the success of that brand in the booming SUV market. There will also be other plant investments as makers like Ford and GM gear up their EV efforts as well."