Mexico to increase its annual auto production by 1 million vehicles within 3 years

Article by Christian A., on August 29, 2012

Foreign manufacturers have come to use Mexico as an export base. Because of this, Mexico will increase its annual auto production by 1 million vehicles within three years, a 38-percent increase compared to the past year, according to Carlos Guzman, who leads ProMexico (the nation's investment promotion agency).

When interviewed at Bloomberg's Mexico City office last Monday, Guzman said that the investments will enable Mexico – currently considered as the No. 4 biggest auto exporter in the world -- to raise its annual production from the 2.6 million units recorded last year. He said that increasing car and aerospace sales will drive up Mexican exports by about 15 percent this year to a record-breaking figure of about $400 billion, exceeding a high of $350 billion hit last year.

On August 6, the country’s Automobile Industry Association (AMIA) said that Mexico's economy is proving itself to be resilient as its auto industry expands. Vehicle production and exports have reached their peak levels in the January to July 2012 period. He added that the new factories of Mazda Motor Corp., Nissan Motor Co. and Audi AG will aid the nation in closing the gap with Korea, the biggest exporter after Germany and Japan.

He said that other companies are looking into the possibility of opening facilities in Mexico. He anticipates a “very good” period of 5-7 years in Mexico when it comes to increasing the exports. As wages in China increase and the more expensive oil prices raise the costs for Asian companies that hope to reach consumers in the U.S, the manufacturers are choosing to open new plants in Mexico (the No. 2 biggest economy in Latin America).

The Economy Ministry said that the auto companies have announced plans to invest $5.3 billion from January to April. Last year, investments had totaled $2.8 billion.

Just days ago, Johan de Nysschen, Infiniti’s new global president, remarked that Nissan’s Luxury marque may possibly produce a new small car in Mexico. De Nysschen quipped that it is only reasonable to produce in or near the United States if the vehicle being produced is targeted primarily towards the country. De Nysschen, former President at Audi of America, influenced Audi's decision in April 2012 to construct an assembly plant in Mexico.

De Nysschen remarked that manufacturing vehicles for the global market is more complicated as Infiniti needs to consider its aspirations for further growth in Europe and South America. He said that if Infiniti exports vehicles from the US to Europe, it needs to pay import duties. However, if the vehicles are exported from Mexico, the company doesn’t have pay these duties. [source: Automotive News - sub. required]

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