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John Goreham Contributing Writer, GM-Trucks.com 6-12-2019 We've recently reported on two major investments by General Motors in its American manufacturing plants. We have also recently reported on GM's closing of five North American plants. Why is GM investing in some plants, while closing others? Obviously, GM considers this to be a good business decision, but what is becoming pretty clear is that GM will be building the high-volume trucks it sells in North America and primarily inside the borders of the U.S., while it shifts to imported crossovers for its high-volume family vehicle models. There are two reasons that underly this shift. Before we get to those two reasons, let's list off the newest family model vehicle introductions by General Motors, and look at where GM has shifted work on other family vehicles. First up the newbies. The Encore and Envision are two new Buick models that GM introduced over the past half decade. The Encore is imported from South Korea and Mexico. The Envision is imported from China. Next up, GM introduced the Chevy Trax, which is a clone of the Encore. Also made outside of the U.S. GM then introduced the Chevy Blazer, which it builds in Mexico. Most recently, GM has introduced the new Encore GX and Chevy Trailblazer. There are derivations of the Encore with more space. They are also imported. GM also shifted the manufacturing of its Chevy Equinox and GMC Terrain from Canada to Mexico. These models make up the bulk of GM's non-truck sales volume. There are two main reasons why GM has shifted its family vehicle business away from the U.S and Canada. Cost and import duties. On the cost side, GM's plants are among the most expensive to operate. This is partly due to the United Auto Worker's successful wage and benefit gains over the past half-century. These workers earn a bit more than the non-union workers who build Hondas, Toyotas, and Nissan inside of the U.S. However, they earn dramatically more than the workers in Mexico, China, and other overseas markets. Other reasons that plants inside the U.S. are more costly to operate than plants in China and Mexico are taxes, environmental costs, and safety costs. The same unions represent workers who build GM's trucks in expanding American plants. However, trucks are protected by a 25% import duty, and that tariff had nothing to do with President Trump. It was promoted by President Kennedy as far back as 1962 and was implemented by President Johnson in 1964. The official name of the order signed by Pres. Johnson, and kept in place by every president since (both Democrat and Republican) is Proclamation 3564. Because of this 55-year-old tariff, hundreds of thousands of American workers have jobs building trucks and parts for trucks. The North American Free Trade Agreement allows GM and other truck makers to build trucks in Canada and Mexico if they so choose without paying the import duty, and most have truck manufacturing operations in those countries to some degree. However, a long-running but fading sentiment in America to buy American has helped influence where the plants are located. There is no tariff that protects crossovers in this fashion. America does have small import duties on vehicles from some countries, but none are double-digit duties like the 25% on trucks. This is why GM is shifting its high-volume family vehicle production and jobs to cheaper markets. It is not alone. Ford builds its new EcoSport crossover that replaces the Focus in India. Jeep's Renegade and Fiat's 500X are imported from Italy. The new Jeep Compass crossover is made in Mexico. Interestingly, the Honda CR-V, Nissan Rogue, and many other "foreign brand" top-selling crossovers are built in America. In non-UAW plants. Top of Page Image Note: GM CEO Mary Barra shakes hands with UAW President Dennis Williams.
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Chevy applied the same grill and front fascia look that the Malibu, Volt, and Cruze now wear. The headlamps now wrap farther around to the fenders. Chevy says this is now its global look. There are also new LED tail lamps and a new rear fascia. Inside, the 2016 Trax get Apple Car Play and Android Auto. The dash is new and designed to offer a feeling of spaciousness. Steve Kim, Chevrolet Trax designer, says of the new interior, “Customers will really notice the elevation in the Trax’s interior design and attention to detail. It’s an environment that transcends segment boundaries, offering rich, premium appointments and seamless integration of the technologies they rely on most.” The Trax also adds keyless open and start and 4GLTE for the new model year. Manufacturers strive to earn the IIHS Top Safety Pick Plus rating. In order to do so the vehicles must score Good on all crash tests and also have Advanced crash avoidance technology. For 2017 the Trax gets a standard rear-view camera and these important active safety features as options: Side Blind Zone Alert Rear Cross Traffic Alert Forward Collision Alert Lane Departure Warning The new 2017 Trax will be available this fall. -
The Trax Midnight Edition starts with an LTZ trim. To this, rims, door handles, side molding trim, bezels, and more get the black-out treatment. The 1.4-liter turbo stays the same, but owners of the Trax and Encore find it to be a good fit. The Midnight Package only adds $500 to the LTZ's $26K MSRP. The Trax Midnight Edition will be on sale in February. -
What makes Trax special is that 47% of its buyers are new to the Chevy brand. The value of those conquest sales goes way beyond the profit on the Trax in the near-term. These could be "forever" customers for the brand. Also, Chevy already does very well with male buyers. Trax buyers are 58% women. This means that the Trax is all about new business for Chevrolet. Commenting on the Trax and its segment, Steve Majoros, Chevrolet director of marketing for cars and crossovers said, “The Trax offers customers a well-equipped, entry-level SUV that was not an option before, and it is one more way we hope to earn customers for life.” GM's legacy models have all done well this past year. Coupled with the strength of these new, bold models in new segments, GM and Chevy are poised to continue to beat the market rate of growth. -
By Zane Merva Executive Editor, GM-Trucks.com 10/2/2014 The entirely new Chevy compact crossover named the Trax will go on sale starting at $20,995. Sharing the same platform as the compact luxury Buick Encore, the Trax will be "the most affordable AWD model in the Chevrolet portfolio". All wheel drive is an option on any trim level, costing $1,500. Other notable available features include key less entry, rearview camera, MyLink with a 7-inch screen, and a built in 4G WiFi hotspot. Trax will also offer Siri Eyes-Free for iPhone users. The Trax goes on sale in January of 2015 and will come in LS, LT, and LTZ trim levels. “Trax is positioned to be a strong competitor in the emerging small-SUV market, which is expected to grow more than 80 percent in the next few years,” said Steve Majoros, Chevrolet director of car marketing.
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All wheel drive is an option on any trim level, costing $1,500. Other notable available features include key less entry, rearview camera, MyLink with a 7-inch screen, and a built in 4G WiFi hotspot. Trax will also offer Siri Eyes-Free for iPhone users. The Trax goes on sale in January of 2015 and will come in LS, LT, and LTZ trim levels. “Trax is positioned to be a strong competitor in the emerging small-SUV market, which is expected to grow more than 80 percent in the next few years,” said Steve Majoros, Chevrolet director of car marketing.
