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International Auto Manufacturers Continue to Invest Billions in Mexico

30 June, 2013

The auto industry in Mexico is booming,with powerful growth from both car markers and associated industries,according to new figures released by the Mexican Auto Industry Association (AMIA). Since 2009 production has nearly doubled,spurring expectations that the nation will produce more than 4 million cars each year by 2017,compared to last year’s 2.9 million,and 2013 is already showing another substantial increase.

“In April alone,Mexican auto production surged to 238,766 units,a 15.6 percent increase from the 206,489 of the same month of last year,AMIA reported,” writes The Financial Times.

The growth is largely due to new investments from Audi,Honda,Mazda,Nissan and Volkswagen,along with related investments in Mexico’s steel industry. In recent weeks,Audi has begun construction on a $1.3 billion assembly plant located in Mexico real estate,while Honda has announced that it will invest in a new $470 million transmission plant and Volkswagen has opened a $550 million engine plant in Silao,Mexico. Similarly,Mazda is investing around $650 million in a new plant and Nissan will open a new $2 billion plant by late 2013,while Ford and GM continue to invest hundreds of millions into their existing plants.

“Thanks to Mexico’s multiple trade accords,most notable the NAFTA pact with the United States and Canada,leading international auto companies have been pouring more than $3 billion a year of investment into Mexico,” reports The Financial Times.

Mexico also provides the ideal environment for manufacturers,thanks to its geographical location between North and South America,its well-developed infrastructure and well-educated workers. As a result,the new plants are also expected to attract a large number of key suppliers to Mexico. This trend is already evidenced by a nearly $3 billion investment to build new and improved factories by Mexico’s steel industry,known as AHMSA,and this number is expected to hit at least $11 billion over the next four years.

Also of note,Mexico’s automobile production is expected to grow by at least 5 percent each year between now and 2018,a number that could increase substantially with additional investments from BMW and Hyundai,which are already considering the possibility of setting up shop in Mexico.

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