Automakers face risk of unintended consequences, expert warns

Trump targets automakers

After President-elect Donald Trump blasted General Motors for making a Chevy Cruze model in Mexico and Ford canceled plans to build a $1.6 billion plant south of the border, one auto expert had a warning for the industry on Tuesday.

Paul Ingrassia, editor of the Revs Institute for Automotive Research, believes there is a "real risk" in the law of intended consequences.

"The big three car companies in Detroit almost went out of existence for doing a series of things to please Washington, to please the union, to please some of their shareholders … at the cost of what made good economic sense," he said in an interview with CNBC's "Closing Bell."

"The best protection for workers is a solidly profitable company that makes sound economic decisions, not decisions that are destined to please the tweets of a president-elect."

On Tuesday, Ford CEO Mark Fields told CNBC that Trump wasn't the main factor in its decision to cancel its plans. Instead, this was due to market demand.

"The bottom line is we're not seeing the volume and the demand that we expected for that plant. And, therefore, we're looking at our capacity and saying, 'You know what, we can build that in an existing facility and use capacity that we already have,'" Fields said in an interview with CNBC's "Halftime Report" earlier in the day.

The company announced on Tuesday it will instead invest $700 million in its Flat Rock, Michigan, plant and add 700 direct new jobs. It will continue to build its Ford Focus at an existing plant in Mexico.

Former Chrysler CEO Bob Nardelli, founder of XLR-8, believes Ford made a very informed decision.

"It's no surprise that small car volume is down significantly year over year. When you think about $7,000 rebate, 72-month financing at no charge, the big vehicles are clearly outstripping the small at these gas prices," he told "Closing Bell."

Meanwhile, GM came under attack by Trump on Tuesday when he tweeted that the auto giant is making a Chevy Cruze model in Mexico and then sending the cars to U.S. dealers tax free.

Lordstown mayor on GM layoffs: Just a speed bump

GM responded by saying it makes most of its Cruze models in the United States and sells only a small number of one model made in Mexico to the U.S.

The mayor of Lordstown, Ohio, where the Cruze is manufactured, told "Closing Bell" no one is blaming planned plant layoffs on Mexico. Instead, he agreed the problem is with small-car sales.

"I've got a lot of faith in General Motors," he said. "I think that we're going to be OK in the long run. This is just a … speed bump, which happens in the business cycles."

Nardelli said he is convinced there is a good balance and believes the automakers and the Trump administration will work things out.

"There's a good understanding between President-elect Trump and the auto industry and what's good for the United States," he said. "They'll work through these issues in a very productive and cooperative way."

— CNBC's Jacob Pramuk and Berkeley Lovelace Jr. contributed to this report.