Mexico: a growing paradise for automotive industry

Since the beginning of the 21st century, Mexico has been applying some economic policies in order to stabilize and stimulate the country’s development. One of the sectors which has considerably grown is the automotive industry, reaching 3.2 million cars made in 2014 from the most important companies worldwide.

This quantity represents 19% from the 16.9 million cars produced in North America. 82% of the mexican automobiles made in the 18 assembly plants located along the country were exported to USA and Canada. multinacional firms as General Motors, Volkswagen and Ford have been benefited for years by the incentives which Mexico’s government has given to foreign investment, and other ones are being attracted too.

There are two main conditions that have promoted the increasing growth of automotive sector. In one hand, Mexico has signed free trade agreements with 45 countries all around the world. On the other hand, labor cost has remained low in contrast with other countries like China, where wages have been rising up to 19% since the beginning of the decade.

Although the North American Free Trade Agreement (NAFTA), has made easier the commercial interchange between Canada, USA and Mexico, the three countries appear as rivals when automakers are deciding where to invest in the latest industrial equipment and to create additional jobs.

In the last years, Mexico has defeated Canada and became a paradise for automotive industry. Canada used to be the best place for this sector in 1980´s and 1990’s, but as it has became a high-cost nation, foreign investors have turn their sight to better opportunities. Nowadays, the country of the maple leaf has only 10 assembly plants.

ProMexico, the government institution which coordinates strategies to strengthen Mexico’s participation in global economy, has aggressively courted foreign investors by giving them generous incentives at exporting their goods. In this scenery, not only the car production has increased but also the jobs for mexican people. Mexico’s automotive workforce has grown 40% since 2008 with 675,000 occupied places.

According to the Center of Automotive Research in Ann Arbor, USA, in 2014 automakers announced additional investment in North America: 10.5 billion dollars for USA, 7 billion dollars for Mexico and 750 million dollars for Canada. Above all automotive multinacional companies, General Motors is the one which is going to make the strongest investment in Mexico during 2013 and 2018: 5 billion dollars and 5,600 jobs.

The automotive industry in Mexico will be still growing. In 2016, Kia will open its first assembly plant in Monterrey, Nuevo Leon, and Hyundai is projecting its arrival to the country two years later. By 2020, Audi, BMW, Honda and Mazda will have installed its first mexican assembly plants and Toyota will have opened its second one in Central Mexico.

In conclusion, for those who work in this sector, Mexico appear as a nation which offers a wide range of business opportunities. Foreign investors can be sure that their cash will be granted and risen with no trouble. Mexico is expanding its commercial perspective in order to have a competitive place in the global markets. Automotive industry is just the first step.