Automotive Manufacturing in Mexico Experiences Explosive Growth

Published On: October 8, 2013

Auto manufacturing in Mexico booms as a bevy of automakers make Mexico their new production home.

October 08, 2013 – As a home to an educated, highly-skilled and motivated workforce, the country of Mexico has become a viable option for companies looking to cut production costs, as well as transportation expenses, from popular manufacturing locales such as the United States, Canada and China. As such, Mexico has become a “strategic alternative,” according to some production-sharing sources, for lower-cost manufacturing, where businesses can increase and retain a high level of global competitiveness by creating their goods there. In related news, it’s been reported that Mexican auto production and sales have grown since this past July, while exports have fallen.

Described as being “mature, dynamic and in a state of continuous growth,” the automotive industry of Mexico has exploded in the wake of economic instability across the globe. And, on a global level, the country ranked eighth as producer of light vehicles, climbing two positions in two years time – surpassing French and Spanish production. Currently, the automotive sector accounts for some four percent of the national GDP and 20-percent of manufacturing production, with the Mexican auto sector expected to continue increasing in the future. In fact, forecast models indicate production will reach some 3.7 million units by 2015.

It’s no secret that a plethora of automakers have made the move to manufacture in Mexico, bringing with them an entire auto parts supply chain. Manufacturing in Mexico as well, as auto production in general, has grown this past year for Mexico-based automotive manufacturers; the production volume in the period from January to July of this year being the highest recorded to date for that time period. Further, 83.9-percent of these vehicles were exported and 16.1-percent remained grounded in domestic markets; in a news release from the Mexican Association of the Automotive Industry (AMIA), Mexico-based automakers exported some 192,940 vehicles in July.

In comparison, destinations such as Latin America and Europe reported decreasing rates of 27.3-percent and 15.6-percent, respectively.  This reduction is believed to be a result of the restrictions of exports to places such as Brazil and Argentina, as well as the troublesome economic landscape plaguing Europe. But as it has been steadily becoming one of the world’s automotive manufacturing powerhouses and hotspots, Mexico may indeed experience another boost if Germany’s BMW and Korea’s Hyundai decide to open plants in Latin America’s second-largest economy.

According to local sources, both automakers have held talks with the Mexican government and while the situation is still in the infancy stages, at least one of the manufacturers could announce plans for the new plant as soon as next year. “With both of them, there have been conversations for future plants,” said Mexican Economy Minister Ildefonso Guajardo. “I cannot talk for them, but I think that in the beginning part of 2014, we’ll have new announcements – at least for one.”

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