Ford Motor Co. is planning to move production of its Transit Connect van for the North American market from Spain to Mexico, according to an industry analyst.
The vehicle, currently built only in Spain, is expected to start production in North America in 2023, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions based in Chester Springs, Pennsylvania.
The van is built in Europe for most global markets, and the vans built in Mexico will be sold in North America, he said.
Ford declined to confirm or deny a plan to move van production to Mexico.
"We don’t comment on speculation about future products," Kelli Felker, Ford global manufacturing and labor communications manager, told the Free Press,
The strategy to build trucks in Mexico allows companies to avoid the burden of higher tariffs on trucks, U.S. analysts say. Currently, if the vans are purchased in the U.S. as passenger wagons, they're subject to a 2.5% tax; cargo vans are subject to 25% duty.
Suppliers have begun planning for production in Mexico, said Fiorani, who works closely with industry sources.
The timing of any Ford announcement on the fate of the Transit Connect, Fiorani said, may relate to negotiations with federal officials involving up to $1.3 billion in import penalties. The van is built in Europe for most global markets, and the vans built in Mexico will be sold in North America.
This penalty would be on top of the $196 million Ford paid in 2020 to U.S. Customs and Border Protection related to the Transit Connect. The legal battle is part of a years-long tariff dispute in U.S. courts between Ford and federal customs officials. Ford has been accused of sidestepping tariffs by classifying cargo wagons as passenger vehicles.
Ford is already building its all-electric Mustang Mach-E and Bronco Sport in Mexico. The upcoming Maverick pickup will be built there too, the company has confirmed.
Ford and its competitors must navigate recent changes in the North American Free Trade Agreement that affect production and importation of vehicles, Fiorani said. Imported trucks are taxed at a rate 10 times higher than passenger cars, making production of pickups and commercial vans outside of North America difficult.
GM, Stellantis build in Mexico, too
General Motors plants in Mexico build the Chevrolet Silverado, Blazer, Equinox and Onix, and GMC Terrain and Sierra. Stellantis plants in Mexico build the Ram 1500, Ram Heavy Duty Trucks, Ram ProMaster van and Jeep Compass.
Manufacturing in Mexico is part of the financial playbook, and that's just a reality.
All Detroit Three carmakers have stamping and engine plants south of the border, too.
"Mexico is one of the best places to locate a plant if you're shipping globally," said Carla Bailo, president and CEO of the Ann Arbor-based Center for Automotive Research. "Fundamentally, Ford makes more vehicles in the U.S. and employs more hourly workers than any other auto manufacturer. They've already made several announcements about vehicles that are going to be built here," including the all-electric F-150 Lightning.
Global companies must do the right thing from a global perspective, she said. "Certainly it’s not any slight. You have to make decisions based on holistic business reasons, too."
Bailo noted that the Maverick pickup has a common platform with the vehicles already produced at Manzanillo, Mexico.
While union leaders have been vocal about keeping jobs in the U.S., UAW Vice President Gerald Kariem, who directs the Ford department, said "on-shoring domestic manufacturing" must be a priority.
"We believe that American UAW workers at Ford are the most skilled manufacturing workers in the world and that all product for the U.S. market should be built and assembled right here in the United States, including the Transit Connect and new electric vehicles," he told the Free Press in a statement.
This is why the UAW supports legislation proposed by U.S. Sen. Debbie Stabenow, D-Michigan, that would tie future electric vehicle subsidies to American assembly, Kariem said. "It is our hope that passage of the Stabenow amendment will result in bringing back these vehicles by tying these government subsidies to incentives for U.S. workers and the good paying highly skilled jobs they deserve."
Getting money back
Legislation sponsored by Stabenow just passed the Senate Finance Committee as it winds through the political process in Washington.
The proposal: Consumers could claim a $7,500 tax credit with the purchase of an electric vehicle for the first five years after the legislation is signed into law. If the vehicle is assembled in the U.S., the consumer would qualify for an additional $2,500. And if the vehicle is assembled in a union shop in the U.S., another $2,500 would be available. So a car buyer could potentially save $12,500 total on an electric car purchase.
This credit would be deducted from taxes owed and, because there is a refundability component, anything left would be included in a federal tax refund.
After the first five years the law is on the books, the base credit goes up to $10,000 for consumers and adds $2,500 if the car is assembled at a union shop. To qualify for any tax incentive after five years, the car must be assembled in the U.S.
