Detroit automakers are pushing new investment in U.S. production of trucks, crossovers and SUVs to tap into the higher profit margins these vehicles yield. They make an awful lot of money. Automakers spend about the same amount to make a vehicle, whether it’s a crossover or truck or sedan.
Yet a full-size pickup truck has an average transaction price of almost $40,000. A large SUV has a transaction price of $58,000 and even a mid-size crossover moves off the dealership at nearly $35,000. But the average transaction price of a compact sedan is less than $19,000 and a mid-size family car is less than $22,000. Analysts say that automakers earn about $1,500 to $2,000 for a passenger car. It's obvious that the trucks and SUVs are driving the profitability of the automakers. That’s why automakers are doubling down on brisk-selling trucks and SUVs. Light trucks – which include pickups, crossovers and SUVs – accounted for nearly 60 percent of U.S. auto sales last year, up from about 55 percent in 2015.
General Motors will invest $1 billion in U.S. factories in 2017, including the decision to move axle production for new full-size pickups from Mexico to domestic plants, creating 450 U.S jobs. Ford canceled construction of a new plant in Mexico. Instead, it will invest $700 million to upgrade its facility in Flat Rock, Mich., and add 700 jobs to build new vehicles there, including a hybrid F-150 pickup truck and an all-electric SUV. Earlier this month, FCA pledged $1 billion to improve plants in Michigan and Ohio that will add 2,000 jobs to build a new pickup truck and two new SUVs – all of them Jeeps.
