Japanese and German auto makers concentrate investments in the Bajío

Mexican Business Web – May 7, 2013

Foreign investment in the automotive sector of Mexico has among its main drivers firms from Germany and Japan, which have concentrated operations in the Bajío, a region where they build production plants for an amount that exceeds the 5.94 billion dollars.

For Japanese companies, Nissan announced last year the construction of the Aguascalientes II complex, in the state of Aguascalientes, with an investment of more than 2 billion dollars, expecting to produce 175,000 platform B cars. This facility will begin operating at the end of this year.

In the same industrial complex, the company Jatco – subsidiary and supplier of components for Nissan – builds a factory of transmissions, with an investment of 220 million dollars. According to the firm, the new factory will be ready in August 2014.

The company Honda (also Japanese), meanwhile, reported on May 2nd that it will invest 470 million dollars to build its fourth plant in Mexico, which will be located in Celaya, Guanajuato, and will focus on the production of transmissions. Tetsuo Iwamura, executive vice president of Honda, said that the factory will generate 1,500 direct jobs and will start operating in the second half of 2015.
This new investment will add to the 800 million dollars that Honda already invests in the construction of its second assembly plant in Mexico, which is also built in Celaya and that it is expected to employ 3,200 people when it starts operations in the spring of 2014.

Another Japanese company that chose the Bajio is Mazda, which last April announced the progress in the construction of its first assembly plant in the country, which is built in Salamanca, Guanajuato, with an investment of 650 million dollars and is expected create up to 4,500 jobs the following year of its opening, in 2015.

The German firms in the automotive sector, meanwhile, also have announced major investments in the country.

At the beginning of this year, Volkswagen (VW) opened its plant of production of engines in Silao, Guanajuato, which had an investment of more than 500 million dollars. Martin Winterkorn, chairman of the executive board of the company, said that the new complex will manufacture up to 330,000 engines that will be sent to the carmakers from VW located in Puebla and United States.

On May 4th, in the meantime, the federal and state authorities of the country as well as directors of the company Audi, a subsidiary of Volkswagen (VW), placed the first stone of the factory which the firm builds in the municipality of San José Chiapa, in Puebla, with an investment of 1.3 billion dollars.

This industrial complex (400 hectares), is the first Audi in America, and is expected to produce 150,000 cars annually, from its opening, scheduled for mid-2016.
BMW, a German automotive which currently does not have plants in Mexico, could settle in the country. Fernando Macias Morales, head of the Secretaría de Desarrollo Económico (Sedeco) of San Luis Potosí, confirmed to local newspapers that this company is interested in investing in the state, so that the entity already requested financial support from the federal government to cover the incentives requested.

According to the source, the BMW project is to set up its first assembly plant in Mexico to produce the sedan Series 3, and launch one of its new front-wheel drive models. The capacity of the plant would be 40,000 cars in its first stage.

Last year, the productive sector automotive manufacturing reported a production of 3,001,974 cars; a number which placed Mexico for second consecutive year as the eighth global producer, according to the Asociación Mexicana de la Industria Automotriz (AMIA).

According to the PriceWaterhouseCoopers’ automotive sector, making cars in Mexico is 20% cheaper that in United States and Canada.

Source: Mexican Business Web

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