Audi’s new plant highlights Mexico’s role as hub in North America

Article by Christian Andrei, on April 20, 2012

Mexico has strengthened its position as a major North American hub for the production of light vehicles, thanks to the decision of Volkswagen AG to construct an Audi assembly facility in the country.  Audi is joining Honda Motor Co., Mazda Motor Corp., Nissan Motor Co. and Ford Motor Co. with plans for expanded or new automobile assembly operations in the nation. 

However, Audi is just the third luxury brand to manufacture light cars on a major scale in Mexico. The only premium vehicle models manufactured in this country are the Cadillac SRX crossover, Lincoln MKZ sedan and Escalade EXT luxury pickup. In 2011, the production of light vehicles increased 13% to a record 2.6 million units.

Mexico's share of North American output reached a record 19.5% last year, the Automotive News Data Center revealed. Favorable trade agreements, low wages, a robust supply base and generous government and tax incentives have pushed vehicle manufacturers the drive to invest in Mexico aggressively. Audi Chairman Rupert Stadler commented that a competitive cost structure, the existing free-trade agreements and good infrastructure played a key role in VW's decision to choose Mexico over other North American locations.

He said that the "trailblazing" action will aid them to defend their position on the global market. Last year, Mexico exported a record 2.14 million vehicles, which is a 15.3% rise from a year earlier, the country's government revealed in March. The government further disclosed that Mexico is anticipated to be the third biggest vehicle exporter in the world and the seventh biggest car manufacturer. As recently as 2004, the nation accounted for less than 10% of the automobiles assembled in North America.

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