Automotive Manufacturing Giants Continue to Swarm Central Mexico

August 15, 2013

News coming out from both European and Asian automotive manufacturing centers and Mexico is that there is a new wave of automaker giants coming to Mexico–or at least doing some serious thinking about major investments within the next few months to a couple of years. Legendary names such as Mazda, Mercedes Benz, Renault, Nissan, Infinity, Honda, Audi, BMW and General Motors are just some of the players venturing deeper across the border with a manufacturing in Mexico focus. Large to mega-large cap expansion projects or ventures no doubt will result.

The latest buzz out of automotive icon General Motors’ headquarters is a $691 million investment as it expands its Mexican manufacturing operations. A notable and impressive GM presence in Mexico exists for the last 78 years, highlighted by the building of Chevrolet Silverado and GMC Sierra pickup trucks in Silao. The GM investment no doubt jettisons employment figures past the already established 15,000 jobs in Silao, San Luis Potosi and Toluca. Nissan, considered by many to be the largest industry leader in Mexico, faces GM’s threat as a close second rival.

As of yesterday’s date, Mazda announced intentions of joint venturing with Sumitomo Corporation in adding a new engine factory at its new vehicle production facility. Once in place, production of more than 230,000 engines annually will result as the automotive manufacturing company presses for an October, 2014 launch. Predicted to employ more than 100 people in its operation, the enterprise starts off with $120 million US dollars as initial start-up investment.

Not far behind, Daimler also announced plans to join Nissan in producing some of their Mercedes cars. Apparently, manufacturing in Mexico seems an alluring proposition to automotive manufacturing big league giants. Under anonymity, a top-level Daimler official conceded that Nissan, already partnered with Renault, decided to fit luxury class Infinity cars with Mercedes-Benz engines.

Several factors contribute to this large-scale invasion of Mexico by leading automotive industries. At a recent press conference hosted by Mexican President Enrique Pena Nieto, mention was made that automakers have lined up for the last two years seeking an expanded presence in Mexico. Free-trade agreements, a cheaper but better trained labor force and the voraciously lucrative US auto market so close make up attractive reasons for the expansion. Many industry analysts believe that South America’s ever-increasing demands now position Mexico to overtake Brazil as the leading Latin American economy.

With Mexican territorial proximity to the vast United States market, its lower production costs and improved logistics, Time Magazine noted that Mexico is ranked as 53rd for ease of doing business globally. However, Ferrari’s North America CEO Marco Mattiacci took it even further when he recently stated, “Mexico is the next China.”