Data: OliverWyman; Table: Axios Visuals China's no longer tops among the cheapest places in the world to make vehicles; today, Morocco, Romania and Mexico are the auto industry's emerging low-cost production centers, according to a new labor-cost analysis by Oliver Wyman. Why it matters: Amid all the disruption in the auto industry — geopolitical tensions, economic headwinds and rising competition — automakers must reconsider where it makes sense to produce future vehicles. --- The big picture: In normal times it's a balancing act between productivity and costs. Whenever possible, carmakers prefer to build cars in the region they're sold. * And certainly President Trump is pressuring companies that sell cars in America to build more factories here, using supersized tariffs to push his policies. * But the decision for companies is not always so simple for a variety of reasons — tooling up for local production of a niche model, for example, often doesn't make economic sense. Driving the news: Oliver Wyman examined the labor cost per vehicle for 250 vehicle assembly plants worldwide. * Since labor typically represents 65% to 70% of the cost of production, the metric is a useful proxy for understanding the global competitiveness of a plant, manufacturer or even a country. Between the lines: The analysis found substantial differences between regions, and between different manufacturers. Premium European car companies such as Mercedes-Benz, BMW, Audi and Jaguar Land Rover, for example had the highest labor cost per vehicle, averaging $2,232. * German producers face the highest costs, at $3,307 per vehicle, largely because they have strong labor unions and manufacture fairly complex vehicles. Electric vehicle companies had the next-highest labor costs, averaging $1,660 per vehicle, despite their non-union wages. * While EVs have fewer parts and are thus easier to build than gasoline cars, most companies don't produce enough of them to leverage economies of scale. * Even Tesla, which is still looking to build a plant in Mexico and struggles with low utilization at its Berlin facility, needs to boost efficiency, Oliver Wyman said. Mainstream car manufacturers have an average labor cost of $880 per vehicle, thanks to their sprawling manufacturing networks, older factories and lower depreciation rates. * The tradeoff, however, is that some have not been investing enough in automation and other technologies to stay competitive, Oliver Wyman said. Chinese car companies have achieved significant efficiencies, with labor costs averaging $585 per vehicle, thanks to newer factories, low wages and fewer model variations. * Notably, Oliver Wyman found that Chinese-owned companies are less efficient than factories operated as joint ventures with western automakers. Where it stands: Morocco, while still a relative newbie in manufacturing, has become the low-cost production center for French carmakers, while Mexico is a low-cost hub for U.S., German, Japanese and South Korean carmakers. * China, widely considered the low-cost place to build cars and auto parts in the 2000s and early 2010s, is fifth on Oliver Wyman's list. What to watch: That map could be upended by a global trade war.

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Data: OliverWyman; Table: Axios Visuals China's no longer tops among the cheapest places in the world to make vehicles; today, Morocco, Romania and Mexico are the auto industry's emerging low-cost production centers, according to a new labor-cost analysis by Oliver Wyman. Why it matters: Amid all the disruption in the auto industry — geopolitical tensions, economic headwinds and rising competition — automakers must reconsider where it makes sense to produce future vehicles. The big picture: In normal times it's a balancing act between productivity and costs. Whenever possible, carmakers prefer to build cars in the region they're sold. And certainly President Trump is pressuring companies that sell cars in America to build more factories here, using supersized tariffs to push his policies. But the decision for companies is not always so simple for a variety of reasons — tooling up for local production of a niche model, for example, often doesn't make economic sense. Driving the news: Oliver Wyman examined the labor cost per vehicle for 250 vehicle assembly plants worldwide. Since labor typically represents 65% to 70% of the cost of production, the metric is a useful proxy for understanding the global competitiveness of a plant, manufacturer or even a country. Between the lines: The analysis found substantial differences between regions, and between different manufacturers. Premium European car companies such as Mercedes-Benz, BMW, Audi and Jaguar Land Rover, for example had the highest labor cost per vehicle, averaging $2,232. German producers face the highest costs, at $3,307 per vehicle, largely because they have strong labor unions and manufacture fairly complex vehicles. Electric vehicle companies had the next-highest labor costs, averaging $1,660 per vehicle, despite their non-union wages. While EVs have fewer parts and are thus easier to build than gasoline cars, most companies don't produce enough of them to leverage economies of scale. Even Tesla, which is still looking to build a plant in Mexico and struggles with low utilization at its Berlin facility, needs to boost efficiency, Oliver Wyman said. Mainstream car manufacturers have an average labor cost of $880 per vehicle, thanks to their sprawling manufacturing networks, older factories and lower depreciation rates. The tradeoff, however, is that some have not been investing enough in automation and other technologies to stay competitive, Oliver Wyman said. Chinese car companies have achieved significant efficiencies, with labor costs averaging $585 per vehicle, thanks to newer factories, low wages and fewer model variations. Notably, Oliver Wyman found that Chinese-owned companies are less efficient than factories operated as joint ventures with western automakers. Where it stands: Morocco, while still a relative newbie in manufacturing, has become the low-cost production center for French carmakers, while Mexico is a low-cost hub for U.S., German, Japanese and South Korean carmakers. China, widely considered the low-cost place to build cars and auto parts in the 2000s and early 2010s, is fifth on Oliver Wyman's list. What to watch: That map could be upended by a global trade war.

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And how do we fix it? Last year’s 2025 Lovelace Report (no relation) from OliverWyman and WeAreTechWomen is well worth your time if you haven’t read it already. It comes out of the gate hard, pointing...

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