Ford CEO Jim Farley has not ruled out the possibility of production of the Blue Oval’s compact Maverick pickup truck being relocated from Mexico to the United States in response to the Trump administration’s auto tariffs.
Farley, whilst discussing tariffs and cost considerations therein on CNBC’s Squawk Box recently explained that the fallout from the Trump administrations’ 25 percent auto tariffs on non-US-made auto parts and vehicles was “a significant issue” for the company and would, in all likelihood remain in place “at least for the next three years.”
While moving production of vehicles like the Maverick, Bronco Sport, and Mustang Mach-E to the US would help alleviate these issues, the inevitable additional costs for consumers and the brand as a whole would need to be considered.
“We’re doing everything we can to mitigate [the tariffs],” said Farley.
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The Maverick, of which a record 19,008 were sold in the US in Q1 this year as part of “the best start in over 20 years” for the brand’s pickup range, will be one of the most significant Fords affected as it is currently built at the brand’s Hermosillo Assembly plant in Mexico. Understandably, confirmation was not made either way, though Farley did not discount the possibility of production being moved to the US in the near future.
“Look, anything’s on the table. We’re building two brand-new plants in the US as we speak – one in Ohio and one in Tennessee – so we’re always building more capacity in the US as we grow. The Maverick is our fastest turning vehicle so far, and we’re going to look at everything, as you would expect as a shareholder.”
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When pushed, and given that decisions regarding production lines are made “on a 20-year basis,” Farley stated that the final “judgment call” would only be made when “the financial numbers look compelling” and “the [tariff] policy is permanent.” The latter is a key point, as the continual fluctuation of the tariffs, which has thus far been on and off more times than we can count, is likely to hinder firm commitments to US production investment by automakers. Nothing would be worse than a knee-jerk shift in production only for tariffs to be dropped suddenly, and the automakers are out of pocket.
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The financial implications of the Trump administration’s tariffs were also discussed at length with CNBC. While Ford’s new ‘From America, For America’ employee pricing policy, which will continue through 4 July, helped secure 501,291 total vehicle sales in Q1 (a $200-million dip, year-to-year), Farley admitted that sourcing all parts for its vehicles within the United States for example would prove both difficult and costly – “[Ford’s competitors] now have $5,000 or more of tariffs that will really hit in the second quarter, like this summer.” – and would more than likely lead to higher MSRPs, despite a recent executive order to reduce the import costs of parts.
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This would be particularly troublesome as Ford looks to maintain the “affordability” of its models. Prices for the entry-level Maverick XL, for example, currently start from $28,145, while the range-topping Maverick Tremor starts from $40,995.
“We can move everything to the US, but every Ford is $50,000, we’re not going to win as a company,” Farley continues. “So that’s what we’re balancing.”
Source: CNBC
CarBuzz, its writers, editors, and owners have no affiliation with any political entity or party. The CarBuzz team comprises members with a variety of differing political and social views. This article does not support either side of the current political landscape and serves only to collate the various developments therein to discuss their potential ramifications on the auto industry.
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