More global automakers are relying on Mexico for the production of quality vehicles at affordable costs. For instance, Toyota Motor Corp. is planning to source its cars from the Mexican factory of Mazda Motor Corp. beginning in 2015. Researcher LMC Automotive said that the vehicle output in Mexico is on course to hit a record 2.86 million units in 2012.
There is plenty of other stuff going on in Mexico. Honda Motor Co. is constructing its first big assembly plant in Mexico. Nissan Motor Co. is building a third plant while Ford Motor Co. makes mid-sized sedans. Meanwhile, Volkswagen AG's Audi brand has plans to open the first luxury vehicle plant in the country in 2016.
Jeff Liker, an engineering professor at the University of Michigan, said that throughout a variety of industries, each company in the U.S. will admit that their best plant or at least one of their top plants is located in Mexico.
He explained that these plants in Mexico offer quality products and are prompt during deliveries. Mexico has long been known as a source of low-cost labor but has been evolving and now caters to Japanese carmakers, who want refuge from the strong yen, as well as German and U.S. companies that hope to expand exports to the other parts of Latin America.
Automakers are pouring investment to an area within about 300 miles (483 kilometers) of Mexico City to benefit from the country’s newfound reputation for making quality products. In addition, Mexico's trade agreements that are in effect in 44 countries make it the ideal export platform to send cars out to South America, Asia and Africa, even the U.S. and Canada. Sean McAlinden, a labor economist with the Center for Automotive Research in Ann Arbor, Mich., said that Mexico holds more free trade deals than the U.S.