Fiat Chrysler to shift small-car production to Mexico

Fiat Chrysler Automobiles will shift production of compact cars to Mexico and move most full-size pickup truck production to Michigan, according to a source familiar with the company’s plans.

The moves may not take place until 2018 or 2019, according to a second source familiar with FCA’s future product schedule.

FCA wants to relocate production of the Chrysler 200 and Dodge Dart sedans to Mexico, where labor rates are lower than in the United States. The automaker earns most of its pre-tax profit on pickups and SUVs, and wants to consolidate production of those high-margin vehicles in the U.S.

The moves may not take place until 2018 or 2019, according to a second source familiar with FCA’s future product schedule.

The production shifts are part of a tentative four-year labor agreement between FCA and the United Auto Workers, Automotive News reported on Thursday. The moves could help FCA offset the cost of increasing wages for most UAW workers under the new contract.

The compact sedans are not slated to be redesigned until mid-2019. A redesign of the full-size Ram 1500 pickup had been delayed until late 2018 and could slip further to 2019, the second source said.

FCA is planning to shift Ram 1500 production from Toluca, Mexico, and from Warren, Michigan, to Sterling Heights, Michigan, where the Chrysler 200 sedan currently is built, the first source said.

The automaker plans to build an all-new Jeep Grand Wagoneer at the Warren plant, according to the first source. That model, which shares its underpinnings with the next-generation Jeep Grand Cherokee, is slated to go into production in 2019, the second source said.

FCA also is shifting production of the Jeep Cherokee from Toledo to Belvidere, the first source said, freeing up capacity in Toledo for the next-generation Jeep Wrangler, which is due in fall 2017, and a companion Wrangler pickup.

The automaker since May 2014 has delayed redesigns of its most important models, including the big Ram pickup, several times. Those delays could leave FCA with a shortage of new products in North America over the next 18 months, three sources told Reuters in late July.

Still to be determined is where and when FCA will build several future crossover vehicles, including replacements for the Dodge Journey and the Jeep Compass and Patriot, a third source said.

The company has agreed to invest $5.3 billion in its U.S. plants over the next four years, the Detroit Free Press reported on Thursday. (Editing by Bernadette Baum)

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