Two thirds of automotive executives surveyed in a poll believe production costs will increase as result of the new trade rules proposed in the U.S.-Mexico-Canada Agreement (USMCA). More than half, a 58%, expect these increases to result in higher prices for consumers. 

The 41% of the officials said that costs will rise 10% over the next three years, another 26% expects the hike will be of 25% or more. Electronic components are considered most likely to experience cost increases.

The survey was conducted online last December among 100 U.S.-based auto executives by market research firm Propeller Insights on behalf of LevaData, a strategic sourcing and procurement consultancy based in San Jose, Calif., that uses predictive analytics to reduce supply chain costs.

The officials said they plan to renegotiate contracts with suppliers and aggressively seek production savings by sourcing more components from suppliers nearby. A 61% of them predict that suppliers located near production sites will be favored, while 73% expect payroll costs to grow unless layoffs occur.

Seventy eight percent of surveyed executives feel the USMCA will have a positive impact on their company in the long term, and 53% feel the new trade deal will ultimately increase North American vehicle manufacturing and provide a net improvement for workers and consumers.

MexicoNow

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