[Alberta's Child]

There's more to this story than meets the eye.

Freepers who have a very thorough understanding of how the auto industry operates have weighed in on this subject several times over the last few years, and their posts have been real eye-openers. One big surprise I got is that the primary reason companies like Ford open plants in Mexico is that this is the only way they can build compact cars and sell them at a price that is low enough to attract buyers. Ford doesn't make much money on these cars and would rather not produce a single one of them, but they must produce -- and sell -- a lot of them in order to meet the Federal EPA fuel efficiency standards for the overall fleet of vehicles they sell in the U.S. And the "sell" part of this is the most difficult part of their business, because a compact car produced by Ford in the U.S. would be priced at a level that would effectively chase its potential buyers to a mid-sized car ... which hurts Ford with the EPA because they aren't selling enough fuel-efficient cars.

Long story short ...

If Ford is canceling its plans to build its Focus model in Mexico, this tells me that they are pretty damn sure the EPA under Trump is going to completely overhaul the fuel efficiency regulations.

[tcrlaf]

CNBC Now
3 minutes ago

MORE: Trump had nothing to do with Ford’s decision to expand its Michigan plant, a high level source tells NBC News http://cnb.cx/2izvOKX

[rb22982]

Good point and I believe you are right

[txhurl]

Did you see about Mexico dropping gas subsidies?

[Sacajaweau]

Corporate taxes will be the key....along with the possibility of import tax.

IIRC, China puts a hefty import tax on US cars.

[CodeToad]

“EPA under Trump is going to completely overhaul the fuel efficiency regulations. “

It is far more than that. The EPA has practically banned plastic manufacturing in the US, which is so much of it is processed in Mexico. I suspect Trump will be presented that issue to resolve.

[Hugh the Scot]

"the primary reason companies like Ford open plants in Mexico is that this is the only way they can build compact cars and sell them at a price that is low enough to attract buyers. Ford doesn't make much money on these cars"

This is hogwash. Toyota manages to sell a lot of U.S. made (small) fuel efficient cars. Enough even to support the manufacture of their larger vehicles...

Outsourcing increases corporate profits. It does not reduce the price of goods, and it never has. Outsourcing U.S. steel content to China reduces the COST to build a product, thereby increasing the MARGIN in that product when it's sold at the same price it sold for using U.S. steel (or more)... It works exactly the same way with outsourcing labor to Mexico. The cost goes down, but not the price.

The decision by Ford may have been a result of capital concerns, rather than anything Trump said, or might do. It costs a lot to start up a new manufacturing facility, even in Mexico.
Any capital invested in a new facility ties up cash that could otherwise be used for stock buy-backs which also increase corporate profits.

[rhubarbk]

If Ford is canceling its plans to build its Focus model in Mexico, this tells me that they are pretty damn sure the EPA under Trump is going to completely overhaul the fuel efficiency regulations.

Another WIN!!!

[Impala64ssa]

And the "sell" part of this is the most difficult part of their business, because a compact car produced by Ford in the U.S. would be priced at a level that would effectively chase its potential buyers to a mid-sized car
This is one factor that killed the Corvair, besides Ralph Nader's long since discredited propaganda. They were good cars, but at the time the Chevy Nova was slightly more $$$, but a little bigger and more "conventional".

[indcons]

BTTT