Audi,which is Volkswagen’s luxury auto manufacturer,has decided to build a new SUV plant in Mexico instead of the U.S.,according to a recent report by USA Today. Estimated by Bruno Ferrari,Mexico’s economy minister,to bring in up to $2 billion in new foreign investment dollars,the automaker remains confident that the decision will be a good one for the brand.
“As an established carmaking location,Mexico offers an excellent economic basis for Audi production operations,” shared Rupert Stadler,Audi’s chairman. “Mexico is one of the world’s top ten automotive locations and offers a blend of tradition and experience.”
Stadler also pointed out that Mexico has “good infrastructure,competitive cost structures and existing free trade agreements,” and that “General Motors,Chrysler and Ford all make vehicles or components in Mexico that are shipped to the U.S.”
Audi reportedly plans to build its Q5 sports utility vehicle (SUV) at the new plant for global distribution,with initial capacity to build 150,000 units annually – a number that is expected to increase over time. Audi is reportedly excited to take advantage of Mexico’s low labor costs and exempt status from import duties,which the auto giant expects to help it reach its goal of selling at least 1 million cars each year in the U.S. by 2018.
“We will have additional demand for production which we cannot cover from Ingolstadt and Neckarsulm from 2015 to 2018,” Stadler told Reuters in reference to the company’s two existing factories in Germany.
Production at the new factory in Mexico real estate is scheduled to begin sometime in 2016,although the exact location for the facility has yet to be announced. Volkswagen,which is Audi’s parent company,already operates facilities in the Mexican cities of Puebla and Silao,which has helped the company’s overall familiarity with the advantages of building cars here.