Facing high foreign production costs because of recent tariffs, many auto manufacturers have committed to long-term domestic production investments.
Key decision makers at GM, Stellantis, Hyundai and Toyota are hoping to avoid absorbing long-term losses from tariffs or drastically raising prices with large investments in U.S. manufacturing, even if it means suffering through higher costs in the short term. These investments represent the industry’s strategy to invest in American production in response to a shifting economic and political landscape.
Can the quality and affordability of American-made vehicles compete in the global marketplace? Will auto manufacturers be able to maintain profits long term, despite higher startup and labor costs? The answers to these questions will determine if greater investment in U.S. production will pay off for manufacturers. If the answer to both questions is yes, manufacturers that have greater domestic production will benefit. If the answer to both questions is no, those that maintain foreign facilities will benefit.
There will be a bit of a transition from shifting labor, plants, suppliers and equipment from foreign production to the U.S. During this period, consumers may experience certain vehicle shortages, fewer color choices, fewer trim options and longer wait times for custom orders. The pre-owned vehicle market may also experience a price increase if the costs of newly manufactured vehicles begin to soar.
2025 Timeline of American Production Announcements
January – Stellantis pledges a $5 billion investment in its U.S. facilities, including hiring 1,500 employees and manufacturing a new midsize pickup in Illinois, building plans for the next Dodge Durango in Michigan and manufacturing the GMET4 EVO engine in Indiana.
March – Hyundai announces a $21 billion investment from 2025 to 2028, with goals to produce 1.2 million units in the U.S. annually, strengthen its American supply chain/infrastructure and expand future American industries, a commitment that’s projected to generate more than 100,000 direct and indirect job opportunities by 2028.
April – Toyota commits to investing $88 million in its West Virginia facility that will focus on assembling hybrid transaxles.
June – General Motors plans to invest $4 billion in domestic manufacturing, with goals to increase American production of electric vehicles, V-8 engines and gas vehicles. GM estimates that this investment will enable them to produce two million more vehicles annually. Large portions of GM’s plans will involve plants in Tennessee, Michigan and Kansas.
About Schneider Downs Automotive Industry Group
The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.
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