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Mexican Automotive Manufacturing Market Attracting Global Investments
added: 2011-08-29

With manufacturing rates in Mexico rapidly increasing since last year, Mexico is fast becoming a world leader in the manufacturing business, according to a recent Dow Jones Newswires story. In the first half of 2011, Mexico's production of automobiles has continued at a record pace resulting from significant demand from the Latin American market. Mexican output of cars and light trucks in the January-June period rose 14 percent to 1.23 million vehicles - a record for the first half of any year in history, according to the Mexican Automobile Industry Association (AMIA).

Auto exports increased 15 percent also in the first half of 2011 to a record 1.02 million units. "Production in Mexico is absolutely being driven by exports, and exports continue to grow," AMIA's President Eduardo Solis said in an April news conference as reported by Dow Jones Newswires via FOX Business.

Mazda has been operating for several years already in Mexico with great success. In fact, Mazda recently announced an investment of $500 million to build a new plant in the central Mexican state of Guanajuato to build the Mazda2 and Mazda3 compact cars and engines, according to Reuters. The plant, which will have an output capacity of 140,000 vehicles per year, will help expand the company's Latin American operations. The plant, which plans to employ about 3,000 people at maximum capacity, is expected to be completed by 2013.

Noting the record in sales since he has moved his operation to Mexico, Mazda's CEO Takashi Yamanouchi said in a recent Automotive Business Review article that its sales results have steadily improved since October of 2005, and in 2010 the company set a new record for both sales volume and market share.

With all the great opportunity that Mexico presents, other multinational companies besides Mazda are also competing to expand their businesses to Mexico. Japanese automobile corporation Nissan Motor Company is referring to Mexico as "one of its fast-growing markets" this year. Nissan recently announced a US$1,050 million investment for the production of new models in its plant in Aguascalientes. In 2010, the company produced 506,494 vehicles, and expects the production level at its Mexican plants to increase by 20 percent this year. Nissan is the second largest automobile distributor in Mexico, with General Motors Company serving as the biggest automaker.

German automobile giant Volkswagen began production of the world's first models of the redesigned Volkswagen Beetle at its plant in Puebla, Mexico with the company predicting that the redesigned model will conquer new markets as a "lifestyle" vehicle, as recently reported by The Wall Street Journal. Volkswagen reported a total investment of US$400 million to re-tool the plant, and production of the car will keep 2,000 Mexican jobs. The company hopes to produce 100,000 Beetles by next year, with about 90 percent destined for export. The new model is expected to be in dealers' showrooms this fall.

Audi and Toyota have also announced plans to expand their operations in North America with their eyes in Mexico as one of their potential target locations. According to Audi's chief executive Rupert Stadler, he would prefer to build their own plant than use the United States-based factory of parent Volkswagen, as reported by a Reuters article, which also says that a decision would be made before 2015.

The world's largest automaker Toyota Motor Corporation is looking for a site for a new engine factory in Mexico, according to a recent Bloomberg story. "Toyota has expansion plans in North America and it is examining and analyzing different locations for a new plant, but it has not made a decision yet and there is not a deadline for it," Toyota's spokeswoman in Mexico Ana Maria Vallarino declared on a phone interview with Bloomberg. Toyota already has a factory in the border city of Tijuana since 2004.

And most recently, Honda Motor Co. will invest $8 million to build a new plant in the central Mexican state of Guanajuato, as reported by a recent The Chicago Tribune article. This investment will employ 3,200 and will allow Honda to contain costs and meet expected demand for small cars once the U.S. market returns to pre-recession levels. As the article states, "the plant will open in 2014, with the capacity to produce 200,000 vehicles annually."

In a Bloomberg interview with Mexico's Economy Minister Bruno Ferrari this week, the official offered a preview of additional investments coming up in the auto manufacturing industry. "We're expecting to have more of those announcements before the year's end," declining to identify the auto manufacturers that may open factories in Mexico, according to the article.

With the automobile export market booming and showing record production, the Mexican market looks very promising. As foreign direct investments continue to be poured, more corporations are realizing the benefits of today's economic and social stability in their Mexican operations, as well as utilizing a high-skilled pool of workers and access to other resources to continue making their bottom lines profitable.

Source: PR Newswire

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