Automakers plan more U.S. production as China vehicle sales fall

Planned factories could add over one million vehicles annually by 2030

The Wall Street Journal reported that the United States is emerging as the last major profit market for global carmakers. Automakers from the United States, Europe and Asia are expanding or planning U.S. manufacturing as they direct pickups, SUVs and hybrid models toward the country’s high-margin vehicle market. Volkswagen is considering making its first American pickup in 40 years, Nissan is promising more rugged SUVs, and Detroit manufacturers are maintaining high margins in the heartland.

Toyota, which has pledged up to $10 billion for U.S. investments, is spending $3.6 billion on a new factory to bring production of its midsize Tacoma pickup back to the United States. The company named a new North American chief this past week and said it is weighing whether to add vehicles at its growing Texas truck factory to broaden its offerings in the region.

European automakers are also introducing large premium SUVs for the United States. Last month, Volkswagen-owned Audi announced a new $4 billion factory in rural Georgia that it plans to build for premium SUVs for American drivers, joining Mercedes and Volvo as they expand their U.S. manufacturing operations and product lines. Audi Chief Executive Gernot Döllner said, “The United States is the second-largest premium market in the world, and today we are not fully exploiting this potential.” He added, “We are changing that.” The Wall Street Journal noted that China remained the world’s largest premium-vehicle market even as sales there declined.

Volkswagen, which was cutting jobs and closing factories elsewhere around the world, said last month it would consider building and selling trucks in the United States even if the Trump administration did not pass trade deals with Canada and Mexico that would make them more affordable. The company said it was considering building the trucks with another automaker and was in talks with Ford about a potential joint venture. Only Toyota’s Tacoma managed meaningful sales volumes against Ford, GM and Ram trucks in a segment Detroit had dominated for more than half a century and where almost no foreign competitor had succeeded.

Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, said, “It’s a market that looks really good from an outsider’s perspective.” He added, “But it’s really hard to tap in to.” Fiorani estimated that new factories planned by automakers would add enough capacity to build more than one million additional vehicles a year in the United States by 2030.

The Wall Street Journal said the expansion could provide customers with more vehicle choices and manufacturing jobs, but it could also leave automakers with expensive, underused factories if demand softens. The average car on U.S. roads is about 13 years old, a historic high, showing that Americans are keeping vehicles longer. GM finance chief Paul Jacobson said he was concerned about underused factories as automakers added manufacturing space and capacity. GM must keep costs down and resist the urge to expand capacity itself, he said.

Toyota was closing in on General Motors’ position as America’s top-selling automaker, a title GM had held for 100 years. The Wall Street Journal reported that foreign rivals were targeting the most profitable and fastest-growing U.S. vehicle types—pickups, SUVs and gas-electric hybrids—while GM and other Detroit manufacturers sought new revenue streams. GM was building what the report described as profitable side bets in software subscriptions, battery energy storage and defense contracting. “The United States is the most lucrative auto market in the world,” GM finance chief Paul Jacobson said recently. “We’ve got to be competitive.”

General Motors also reversed its long dismissal of hybrid technology as an unnecessary detour on the path to electric vehicles after Toyota, Honda and Hyundai recorded strong hybrid sales gains this year. GM plans hybrid versions of many popular vehicles, including a trio of three-row SUVs and the Chevrolet Equinox SUV, according to people familiar with the matter. The Equinox was GM’s top-selling model behind the Silverado and Sierra pickups, and the company has said it will not prioritize market-share growth.

Hyundai aims to launch dozens of new or revised models in North America by the end of the decade, including off-roaders, its first-ever midsize pickup and high-end models from the Genesis brand. Hyundai CEO José Muñoz said at a recent event, “My top three priorities are: U.S.A.” He explained that many of the automaker’s new models were tailored for American drivers.

Nissan plans to bring back its Xterra SUV and release hybrid versions of its top sellers, including the Rouge SUV that Nissan launched nearly a year ahead of schedule. Chief Executive Ivan Espinosa said he aims to raise Nissan’s U.S. market share to about 7% from below 6% today, a change that would mean more than 160,000 additional vehicle sales.

Ford’s sales were slowing, according to The Wall Street Journal. The company planned a group of more affordable models and the Fathom electric pickup truck, which was designed to match the lower-cost, high-technology appeal of Chinese electric vehicles. Chief Executive Jim Farley recently told employees he expects Ford to grow global sales by 20% by the early next decade. Ford was also pressing its case in Washington, arguing that tariff relief extended by the Trump administration to South Korea and Japan put it at a competitive disadvantage to Asian rivals. Hyundai was closing in on Ford in the race for third place among America’s top-selling automakers.

Honda was growing its manufacturing presence in Ohio. “It’s going to be a challenge as we go forward, but I think we know what the consumer is looking for,” Honda U.S. sales chief Lance Woelfer said. Nissan North American product chief Ponz Pandikuthira said, “There’s a sense of urgency. U.S. success and profitability is critical.” The Wall Street Journal described that urgency in Pandikuthira’s dealings with Nissan’s Japanese headquarters and reported that he does not wait for a reply when he has a question for the boss. “I don’t need to wait for a formal meeting to address an issue with the CEO,” he said. “I literally send them a WhatsApp message and say, ‘I need a quick decision on this, please help.’”

Automakers’ focus on the U.S. market reflects demand for large pickups and SUVs, which they sell at high profit margins. Buyers have shown willingness to accept record-high sticker prices. Typical new-car prices are around $50,000, and roughly one-fifth of new-vehicle buyers have monthly payments above $1,000.

The Wall Street Journal also pointed to weaker market conditions elsewhere. Vehicle sales in China were down more than 20% through September, and the report said automakers there faced excess capacity. The report described conditions as weak in Europe, Japan and the Middle East.

Two U.S. policy changes also supported automakers’ focus on the domestic market, according to the report. The Trump administration eliminated strict emissions and fuel-economy rules that had pushed automakers to produce electric vehicles, often at a loss, while high tariffs and technology bans insulated the U.S. market from lower-priced, technologically advanced Chinese cars. Over the past decade, Chinese central and local governments invested billions in the country’s electric-vehicle industry, which was built with labor costs a fraction of those in the West. The report said lower-cost Chinese vehicles had expanded overseas and increased competitive pressure on European automakers in their home markets.