Audi has kicked off a plan to construct a $1.3 billion factory in Mexico where it will produce more than 150,000 cars annually. This property is located at the hills outside of San Jose Chiapa, between Mexico City and the port of Veracruz.
Volkswagen Group believes that the construction of this factory will help it achieve its goal of becoming the biggest automaker in the world and beating BMW Group as the top-selling premium automaker globally.
With this plant, Audi gets a production base nearer to the U.S. where it hopes to catch up to its rivals, the big German automakers.In 2012, Audi sold just about 50% of what BMW and Mercedes-Benz sold in the U.S. At a recent industry conference in Vienna, VW CEO Martin Winterkorn said that the new plant in Mexico has a vital role for Audi, since this will allow Audi to assemble cars in North America and not be affected by U.S. dollar currency swings.
It’s also expected that Audi’s profits will support Volkswagen’s move to beat General Motors Co. and Toyota Motor Corp. for the title of world's biggest automaker by 2018. In the first quarter, deliveries of Toyota and its subsidiaries came to a total of 2.43 million vehicles compared to GM's 2.36 million and VW's 2.27 million. Audi made up 56% of operating profit for VW Group in the first quarter.
UBS predicts that this year, Audi is predicted to achieve 5 billion euros, or 42%, of the Volkswagen Group’s operating earnings as an aging model lineup and expansion costs cut into margins. Christian Stadler, a management professor at the University of Warwick in Coventry, England, said that Audi is winning in markets like China so it should be able to replicate this success in North America. He thinks that it would be beneficial to have its production plant near the market.