There’s an irony to this.
Americans love pickup trucks and FCA CEO Mike Manley is tired of being the number three brand, behind Ford and GM. The problem at the moment for Manley is not enough production capacity in the US. The solution, according to Reuters, could be in Mexico.
Earlier this year, we heard that FCA was considering a plan to move all Ram production to Michigan from Mexico. However, Sergio Marchionne was still alive and CEO at the time, and his successor, Manley, has other ideas. “We need to get ourselves into second,” Manley told Reuters. “Frankly, I don’t care which of the two I take share from.”
To take those sales shares away from either of those Detroit-area competitors, Manley is reconsidering last January's plan to stop building Ram heavy-duty pickups at a plant in Saltillo, Mexico and move Ram production entirely to the US, such as at a facility in Warren, Michigan. The problem with that plan is not enough trucks can be built in the US to meet demand and new sales goals.
FCA needs as much production capacity as possible in order to meet its goals. Now that the US, Mexico, and Canada have tentatively worked out a new trade deal, FCA feels it can safely reconsider its previous plan regarding Mexico because it doesn’t fear a 25 percent tariff.
“With a combination of Warren and Mexico building what we call the classic truck, we have enough production to increase output next year if it’s required,” Manley said. Manley fully knows just how important Ram trucks, as well as Jeep, is to FCA as a whole, the two brands accounted for almost 85 percent of FCA’s second-quarter pre-tax profit.
Pickup trucks also happen to be vital to the Detroit Three automakers’ yearly profits, so it’s understandable why Manley is anxious to steal market share from his two direct rivals. Ironically enough, Mexico could be the way to do just that.