Top Automotive Manufacturers Leveraging Mexico’s Growing Economy

Forbes recently ranked the top ten world’s largest auto makers, looking at gains in production and profit in 2014, and put Toyota on the top of the list as the worlds largest auto maker. With a wide increase in April 2014 over April 2013, Toyota launched 13.3% more vehicles into the market, helping to boost them to the top spot of the global automotive manufacturing companies.

Toyota also announced in April of 2015 that they will invest $1 billion in the infrastructure and building of a new manufacturing plant in Guanajuato, Mexico, making this the second manufacturing facility that Toyota will operate in Mexico. The Toyota plant in Tijauna, which produces Tacoma vehicles, is on track to deliver almost 90,000 units in 2015. At the additional plant in plans for Guanajuato, where the Corolla line will be produced, Toyota forecasts delivery of close to 200,000 vehicles. The impact of a new, state-of-the-art production facility in Mexico will keep Toyota at or near the top of the list of global auto manufacturing companies.

The remaining automotive companies on the list of the top ten producers for 2014 are: #2: Volkswagon Group; #3: Daimler; #4: BMW Group; #5: Ford Motors; #6: Honda Motors; #7: General Motors; #8: Hyundai Motors; #9: Nissan Motors; #10: SAIC Motors.

While Toyota stands as the pinnacle automotive manufacturer of the group, with production numbers of automobiles topping over 10 million per year for 2012 and 2013, the Volkswagon Group came in a close second for 2013 with just shy of 10 million units delivered to the market. Volkswagon’s global reach is impressive with 100 manufacturing and production facilities located across the continents in 27 different countries. Daimler, best known for their luxury brand Mercedes-Benz, delivered 2.3 million automobiles in 2013 and has invested in manufacturing facilities on five continents to meet the demand not only for the Mercedes-Benz line of automobiles but also to meet the demand for their commercial vehicles; Daimler, while in the third spot for automotive production, is the world’s biggest manufacturer of commercial trucks, buses, and other commercial vehicles. At the bottom of the list at number ten, SAIC Motors, headquartered in China and the leading Chinese manufacturer of automobiles, delivered over 5 million units, both passenger and commercial, to the market in 2013. With rising sales, SAIC has held its place as the leading Chinese automobile manufacturer for over eight years and also boasts of successful joint ventures with two other members of the top ten list: Volkswagon Group (#2) and General Motors (#7).

As of 2014, the top three countries for automotive production are China, standing at over 18 million produced, the USA, with over 10 million automobiles produced, and Japan, with over 8 million automobiles produced. While China has dominated as the world’s largest automobile producer, having experienced rapid growth since 2000 when they produced 3.5% of the world’s automobiles and now in 2014 produce 27.63% of the world’s automobiles, several countries have shown strong growth as well, including Mexico, which has reported auto exports growing in the double-digits every year since 2010.

The remaining countries on the list of top ten countries for automotive manufacturing are, in order: #4: Germany; #5: South Korea; #6: India; #7: Brazil; #8: Russia; #9 Mexico; #10: Spain.

Interestingly, while the manufacturing segment in Latin America, including Mexico, Brazil, and Argentina, experienced a downward trend in 2014 leading to no overall growth for 2014, Mexico was the exception within Latin America. The automotive manufacturing industry within Mexico increased by an astounding 11% during the January-September period of 2014, with future growth expected to continue well into 2015. The automotive manufacturing industries within the two other leading Latin American countries, Brazil and Argentina, faced critical downward trends within the same time period. Brazil, where overall manufacturing production across all industries has posted no growth at all over the last four years, experienced a stunning 18% decrease in automobile production during January to September of 2014, a serious blow to an already crippled Brazilian manufacturing segment. Argentina’s automotive manufacturing industry has also fallen on hard times in 2014, despite experiencing a record peak in production for 2013. With over a 21% decrease in automotive production for the January-October 2014 time period, the automotive manufacturing industry in Argentina continues to show projected declines with fewer domestic sales as well as a lessening of demand for exports. Mexico continues to stand alone among other Latin American automotive manufacturers as a growing, thriving, and successful country for automotive manufacturers seeking to establish overseas production facilities.

As the impact of NAFTA’s implementation over twenty years ago continue to reverberate through the global economy, Mexico’s economy and manufacturing segment continues to show strong growth and gains year over year and offers a solid return on investment for global manufacturers looking to relocating their production facilities abroad. While myths about manufacturing in Mexico still linger, most, if not all, have been proven false by the performance of manufacturing across all industries in Mexico, and particularly by the rapid growth in the automotive manufacturing industry. One key myth, that Mexico is a poor country with few resources and a lack of educational opportunities, holds no ground against the facts: Mexico has a rising middle class with half of all its citizens owning a vehicle, and nearly all of its citizens owning a mobile phone and a television. The rise in disposable income for the middle class of Mexico has led to increasing investments in education for the children of the middle class with university education enrollment increasing from 1 million in 1980 to 3 million in 2013, as well as over 45,000 private schools for primary and secondary education, which comprise 33% of the total number of schools within Mexico.

Mexico’s GDP grew by 1.1% in 2013, with projected forecasts of 2.4% growth for 2014 and 3.5% growth for 2015. With the construction sector in recovery and structural reforms impacting the ability of the private sector to invest in natural resources as well as labor reforms that make Mexico competitive in the global market, Mexico offers an increasingly attractive manufacturing climate and further gains are projected as the automotive manufacturing in Mexico and associated industries continue to benefit from these widespread reforms.