Automotive News - Traverse City - August 8, 2019 - 6

AUTOMOTIVE NEWS CAR MBS DAILY

THURSDAY, AUGUST 8, 2019

There's no slowdown in plant investment
In weakening market, carmakers think ahead
Published May 6, 2019,
in Automotive News

Vince Bond Jr.
and Lindsay Chappell
vbond@crain.com

f 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

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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 Feb

ruary 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
that it will suspend the seccould slot below the upond shift on a line in Maryscoming Grand Wagoneer.
ville, Ohio, to retool it to
begin building electrified
Toyota Motor North
vehicles.
America last week said it
will spend $1.1 billion on
Ford Motor Co. said in

production of its Toyota
February that it will spend
RAV4 and Lexus NX cross$1 billion on its plant in
Chicago to launch three
overs in Ontario. The com- Chesbrough:
new utilities there.
pany also has announced a Thinking ahead
Indicators of a North
U.S. manufacturing expansion, committing $749 million in American industry slowdown?
Hardly - despite signs that might
new investments to add about 600
jobs at plants in five states. suggest otherwise.
April ended with sales of 1,328,649
A $1 billion expansion project is

underway at Mercedes-Benz's facto- cars and light trucks, a 2.3 percent dery in Vance, Ala., for electric vehicle cline from a year earlier. In midproduction.
March, credit rating service Moody's
American Honda said last month 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."

Strong choice
Charlie Chesbrough, senior economist for Cox Automotive, said with all
of the uncertainty around the world,
such as the China slowdown and
Brexit in Europe, the U.S. remains a
strong choice for business investment.
The U.S. economy, he said, is on
solid footing. Even with a potential
slowdown in the near term, the longer-term outlook for the economy
remains strong. The country has
"positive population growth, and
massive economic resources, and
thus remains a viable option for
manufacturing investments."
"It may seem like a bad time for
OEMs to be making large investments, but the auto industry remains
focused on longer-term strategies,"
Chesbrough said. "Companies are
thinking today about vehicles they
will be manufacturing three to five
years from now."
Mazda is capitalizing on this shift
with a manufacturing joint venture
in Huntsville, Ala., with Toyota.
The plant will produce the Toyota
Corolla sedan and a yet-unnamed
Mazda crossover that will be new to
North America. The plant will have
the capacity to churn out 150,000
crossovers per year. Production is set
to begin in 2021.

'Force to be reckoned with'
FCA's pending Michigan investments will double down on the utility-vehicle wave. The cash will support
production of a variety of nameplates
such as the three-row Wagoneer/
Grand Wagoneer, the Grand Cherokee and the unnamed three-row Jeep.
Jeremy Acevedo, manager of industry analysis for Edmunds, said
the unnamed three-row Jeep likely
will take aim at the Ford Explorer,
Honda Pilot and Toyota Highlander.
It's slated to roll off the line at the Detroit plant by the end of 2020.
"Now with Jeep entering that segment, Jeep is a force to be reckoned
with," Acevedo said. "The fact that
they're going to be expanding their
size and expanding their appeal to a
bunch of shoppers who kept the
Grand Cherokee off their list because it didn't serve their needs.
Opening that whole sector is huge
for them and bad news for everybody else in that space." a

http://www.dana.com/light-vehicles

Automotive News - Traverse City - August 8, 2019

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