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Auto Industry Giants Invest $2 Billion in Mexico

02 May, 2016

Over the last three years,Mexico has attracted more than $23 billion in new investment dollars from global car and car parts companies,reported the Toronto Star,and the nation’s total production is expected to hit upwards of 56 percent by 2020.

“Mexico is the new Detroit or Ontario.”

And while Ford’s USD $1.5 billion investment in a new assembly plant in Mexico this year is expected to be the largest single investment in the nation’s booming auto industry,it certainly won’t be the only new investment. For example,Pirelli plans to build a USD $200 million tire-making plant close to its existing operation in Silao,Mexico. Also of note,Kia Motors is scheduled to begin production at its first Mexico factory by mid May of this year as planned,marking a new corporate foothold in the region.

“The industry as a whole chalked up record output last year,” wrote Mexico News Daily. “Production of cars and light trucks was up 5.6 percent to 3.4 million units.”

As for Ford Motors,the new plant will produce more small cars and is expected to be in operation by 2018. Mexico is Ford’s fourth largest vehicle manufacturing site for global customers and according to Forbes,the automotive giant has been manufacturing cars here since 1925. Since the cost of manufacturing is lower in Mexico,Ford is seeking to boost its profitability in an effort to please shareholders. 

In fact,cheaper labor costs in Mexico have also encouraged a number of other automakers to set up shop here and open production facilities in the region. In addition,the growing number of free trade agreements held by Mexico make doing business here a breeze and allow for more profitable exports from Mexico to other countries.

“Total foreign direct investment in Mexico this year is expected to be $30 billion,up from $28.5 billion last year,” wrote Mexico News Daily.

Pirelli’s first plant in Mexico opened in 2012 following a $360 million USD investment and produces high performance and ultra high performance passenger car and SUV tires. By the end of 2018,the auto supplier estimates its total investment in Mexico will top $600 million and the new plant will  also produce high performance tires for the North American market.

“The new investment confirms the importance of Mexico among Pirelli’s international operations,” stated a company spokesperson in a press release. “Mexico offers a strategic position that is ideal to develop Pirelli’s NAFTA area presence.”

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