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Mexico Auto Boom Continues to Boost Economy & Attract New Investments

30 July, 2013

Much has been written about Mexico’s booming economy in recent years,and much of the nation’s success is owed to its thriving manufacturing,tourism and real estate sectors. The automotive industry is at the forefront of Mexico’s impressive growth and strong economy,with record investments pouring in and no signs of slowing down in the near future.

“Mexico is making nearly three million vehicles a year,with output expected to increase 38 percent by 2016 as Nissan,Mazda and Audi add plants and other manufacturers ramp up production,” writes the Washington Post. “GM said [this July] that it will invest $691 million to boost its Mexican assembly lines.”

In fact,Nissan has partnered with industrial Mexico real estate developer Vesta to invest $57 million in a new,integrated supplier park. Already on board for the project are POSCO,which produces sheet metal,and Nissan Aftersales operations,among a variety of other specialized partners who can support the rapid expansion of production capacity in Nissan’s new $2 billion manufacturing complex,where Phase One of automotive operations will commence by the end of 2013.

“Japanese carmakers have been pouring money into Mexico in recent years,” writes the Financial Times. “Nissan became the No. 1 company in Mexico,in terms of sales,nearly five years ago,overtaking no other than GM." 

Rail access is an important part of the future automotive industry in Mexico,the U.S. and beyond. Railroads are already benefiting from the nation’s booming manufacturing sector,hauling Fords,Nissans and other cars out of Mexico in record numbers. Rail makes sense for a variety of reasons,including its fuel efficiency and high volume transport capacity.

“The Mexican Automobile Industry Association projects annual output will reach four million vehicles in 2017,a gain of more than 35 percent from last year’s record,” writes the Detroit News. “Mexico ranked eighth in global production in 2012,up from 12th in 2005,according to the International Organization of Motor Vehicle Manufacturers.”

Italian tire maker Pirelli has also announced an additional $200 million investment in Mexico this month,in order to begin manufacturing eco-friendly performance tires at its existing plant in Silao. This will boost the plant’s total annual production capacity to 3.5 million tires by 2015,a number that is expected to hit more than 5.5 million by 2017. According to Mexico’s economy ministry,the investment will create more than 1,400 direct jobs and 400 indirect jobs.

“Mexican auto factories and Mexican manufacturing offer First World productivity and quality at Third World wages,” professor Harley Shaiken at the University of California at Berkeley told the Washington Post. “That is an unusual combination and right now it is a defining combination.”

Also of note,global automotive supplier DENSO has announced that it will invest nearly $51.5 million to expand its existing plant in Silao,Mexico. The move will add around 450 jobs on a new line that will begin production in 2014. Finally,Mercedes-Benz has announced that it is seriously considering bringing production of its new budget model to Mexico,while a new car manufacturer called RON Automóviles is starting up in Mexico,with plans to build a new line of sports cars inspired by the Lotus 7 and Ariel Atom.

“The production surge in Mexico is projected to attract billions more in new investment in the next several years as car companies increasingly look to use the country as a global manufacturing hub,” writes the Washington Post.

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