Tuesday, January 3, 2017

Trump and the Chevy Cruze

Trump attacks GM:
President-elect Donald Trump on Tuesday attacked General Motors in a tweet, claiming the auto giant is making a Chevy Cruze model in Mexico and then sending them to U.S. dealers tax free. "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!" Trump said on Twitter.
GM and Ford sell around $150 billion worth of cars per year to consumers around the world. Their production is also global. My understanding is that this Cruze was more of a hit among Asian consumers but yes a few are sold in the US. GM’s response?
GM later responded to Trump's tweet, saying it makes most of its Chevy Cruze models in the United States and sells only a "small number" of one model made in Mexico in the U.S. "General Motors manufactures the Chevrolet Cruze sedan in Lordstown, Ohio. All Chevrolet Cruze sedans sold in the U.S. are built in GM's assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S," the company said in a statement. GM told CNBC that it sold about 190,000 Cruzes in the U.S. in 2016. About 4,500 of those, or 2.4 percent, were hatchbacks made in Mexico.
Bloomberg BNA adds more context to this dust up:
General Motors CoBy Ben Brody and David Welch President-elect Donald Trump criticized General Motors Co. for building a version of the Chevrolet Cruze compact in Mexico, saying the largest U.S. automaker should build the car at home or face a hefty tariff. “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border,” Trump tweeted Tuesday. “Make in U.S.A. or pay big border tax!” Every Cruze sedan is built in Ohio and most of GM’s Mexican-made hatchbacks are exported to global markets,said Tony Cervone, a company spokesman. He declined to comment on whether the company planned to talk to Trump. Trump’s tweet is the latest example of interventionist behavior toward U.S. companies that have included Boeing Co., Lockheed Martin Corp. and United Technologies Corp. His threats against Mexican-built vehicles have the potential to impact the nine global carmakers, including Toyota Motor Corp. and Nissan Motor Co.,that have announced more than $24 billion in Mexico investments since 2010. Volkswagen AG’s Audi, BMW AG and Daimler AG each build or plan to assemble luxury vehicles, engines or heavy trucks in the country. GM said in November it planned to cut a shift at its Cruze plant in Ohio and furlough 1,200 workers there due to weak demand for small cars.
Got that – Mexico makes for foreign markets and the US purchased cars are made here. Trump is an idiot.


Bruce Wilder said...

The Maquiladora are ideal economic arrangements.

Anonymous said...

Translation of Trump: "Americans should pay more for Cruze hatchbacks." either by a tax or by loss of efficiency in making them here. Or perhaps they should just not get to buy the hatchback at all.

rjs said...

Trump is not an idiot. His tweet got 100 times more coverage than any rebuttal. the same day, Ford cancelled plans for a new Mexican factory. it will be built in Michigan instead. in the rust belt, Trump's tweet gets credit for that, no matter how many other extenuating circumstance intervened in the meantime...

ProGrowthLiberal said...

rjs should read Dean Baker's take on what Ford did. A change in the product mix driven by Obama's stance on global warming - not some Trump tweet. BTW - 97.7% of US consumed Chevey Cruze's are made in the US.

Barkley may be right - Trump is not the idiot. Those who believe what Trump tweets are.