Stellantis May Rethink Mexico Manufacturing Strategy

Stellantis is evaluating its manufacturing operations in Mexico due to potential tariffs proposed by President-elect Donald Trump. Christine Feuell, Chrysler/Ram CEO, recently discussed the company’s strategy at the Los Angeles Auto Show, highlighting the uncertainty surrounding trade policies and their potential impact on production and supply chains.

Feuell explained that Stellantis is actively considering adjustments to its manufacturing network to mitigate disruptions. “It’s obviously part of all the scenario planning we’re doing,” she said. While no decisions have been finalized, Stellantis is keeping its options open.

Tariffs Pose Risks to Automotive Industry – 

Trump’s proposed tariffs include a 60% levy on Chinese goods and a 20% tariff on imports from other countries, including Mexico. These measures could increase production costs and force automakers to reconsider their global manufacturing strategies.

Stellantis currently produces the Ram 2500/3500 Heavy Duty, Ram 3500/4500/5500 Chassis Cabs, and Ram ProMaster commercial vans and plans to manufacture some Ram 1500 trucks at its Saltillo, Mexico plants. This expansion aims to capitalize on lower production costs. However, the decision has sparked criticism from the United Auto Workers Union, which cites job losses in the U.S. as a concern.

Balancing Cost Savings with Potential Tariffs – 

The Saltillo Truck Assembly Plant is a key part of Stellantis’ strategy to reduce production expenses. Still, the proposed tariffs threaten to undercut those savings by imposing higher costs on imported vehicles. Shifting production back to the U.S. or diversifying into other markets could be potential solutions, though they come with their own challenges.

Feuell acknowledged these risks, stating, “If we need to pivot with regard to the mix that those products represent, then that is certainly an option for us to consider.”

Impact on EV Strategy – 

Stellantis’ EV adoption plans could also face setbacks if Trump’s administration removes the $7,500 consumer tax credit for electric vehicle purchases. This incentive has been a driving factor in EV sales. Without it, Stellantis may need to adjust its EV pricing and production plans to maintain competitiveness.

Navigating an Uncertain Future – 

Stellantis has already adjusted its operations due to market pressures, including the layoff of 1,100 workers at its Warren Truck Assembly Plant in Warren, Michigan, after discontinuing the Ram 1500 Classic. The facility still builds the Jeep® Wagoneer and Grand Wagoneer SUVs based on the same architecture as the Ram 1500. The facility is only a few miles from the Sterling Heights Assembly Plant, where the Ram 1500 is produced.

The company’s first-half profit drop in 2024 further underscored the importance of adapting to changing economic and political climates.

Currently, Stellantis produces the following vehicles in Mexico for the American market:

• Ram 2500
• Ram 3500
• Ram 4500
• Ram 5500
• Ram ProMaster
• Ram ProMaster EV
• Jeep Compass
• Jeep Wagoneer S

Future production in Mexico will include the following:

• Ram 1500
• Jeep Recon
• Jeep Cherokee

Stellantis remains committed to its core strategy but is prepared to pivot as necessary to address new challenges. The company’s ability to navigate these uncertainties will be critical to its future success.