Fiat Chrysler CEO warns consumers could 'pay the price' if NAFTA unravels

  • Speaking on the sidelines of the North American International Auto Show in Detroit, Fiat Chrysler's Chief Executive Sergio Marchionne told CNBC on Monday: "The consumer, in the absence of a realignment of production facilities, will pay a price. It is not insignificant"
  • Last week, Fiat Chrysler announced the company would shift production of heavy-duty pick-up trucks from Mexico to the U.S. by 2020
  • Marchionne also sought to cool speculation that Fiat Chrysler could sell-off individual brands within the group

Fiat Chrysler is concerned consumers could be left exposed to price hikes as a result of NAFTA negotiations.

Speaking on the sidelines of the North American International Auto Show in Detroit, Fiat Chrysler's Chief Executive Sergio Marchionne told CNBC on Monday: "The consumer, in the absence of a realignment of production facilities, will pay a price. It is not insignificant."

Last week, Fiat Chrysler announced the company would shift production of heavy-duty pickup trucks from Mexico to the U.S. by 2020. That decision should go some way to alleviating some of U.S. President Donald Trump's concerns about the dislocation of production capacity out of the country, Marchionne said.

The move should also reduce the risk those same trucks would be hit with a 25 percent tariff if talks over the North American Free Trade Agreement (NAFTA) were to unravel.

The Trump administration has threatened to withdraw from NAFTA, which is heavily utilized by automakers with production and supply chains spread across the U.S., Canada and Mexico. Fiat Chrysler's CEO said it is more expensive for automakers to manufacture heavy-duty vehicles in the U.S. rather than Mexico.

President Donald Trump tours new cars with auto industry leaders, including Fiat Chrysler CEO Sergio Marchionne (L), at the American Center for Mobility, a test facility for driverless car technology for American Manufactured Vehicles in Ypsilanti Township, Michigan, U.S. March 15, 2017.
Jonathan Ernst | Reuters
President Donald Trump tours new cars with auto industry leaders, including Fiat Chrysler CEO Sergio Marchionne (L), at the American Center for Mobility, a test facility for driverless car technology for American Manufactured Vehicles in Ypsilanti Township, Michigan, U.S. March 15, 2017.

Fiat will not 'break up' company

While speaking at the North American International Auto Show on Monday, Marchionne also sought to cool speculation that Fiat Chrysler could sell-off individual brands within the group.

Last year, several Chinese companies were thought to be interested in acquiring the iconic Jeep brand — a major driver of sales for Fiat Chrysler. The interest from Beijing followed comments from Marchionne in which he indicated consolidation may be necessary within the auto industry.

"The answer is no we're not going to break up anything… We have no intention of breaking it up and giving it to the Chinese," he said.