The Ford F-150 is bad for Mexico, and not because it pollutes.
There are few things that Americans love more than big cars. Maybe it’s the cultural inclination for the frontier life and the ability to load up a car and just go, or maybe it’s the fact that many parts of America are expansive and there isn’t a need for small cars here like there is elsewhere in the world. Either way, this affinity with large cars impacts the rest of the world, especially countries that make small American cars. Now that low gas prices are driving more Americans to the SUV and truck end of the dealership lot, Mexico is beginning to feel the hit.
Its auto industry contracted by 16% in April of 2016 due to the lessened demand for small passenger cars, which are made in Mexico in large numbers. Automakers from all around the world make cars in Mexico and then send them to the US, so everything from a Ford Fiesta and a Honda Fit to the Fiat 500 and VW Golf will have to cross Trump’s wall if they want to make it into the US in the future. In place of the small cars that Mexico makes, Americans are snatching up midsized pickup trucks like it’s the last batch they’ll get, followed by minivans, large vans, subcompact crossovers, and compact luxury crossovers. Even though Mexicans are still buying small cars, the lack of dollars coming in from up north is leaving a gap in the market.
Now, Mexico is looking to fill that space and luckily their prayers have been answered. In a few weeks, Kia will open a new auto factory in Mexico and Audi will start building SUVs there later this year. The car plant will be of some help but it's the Audi plant that will offer more protection against Mexico's current problem. By diversifying the types of cars that the country makes, it can protect itself from fluctuations in the market, which is a lesson GM learned the hard way when the SUV market crashed in the early 2000s. Audi's plant will help add to the number of large cars that are built in Mexico, which include the Dodge Ram and GMC Sierra. This should help mitigate some of the damage and allow the Mexican economy to improve.