Reuters - Video

Edition: U.S. | U.K. | IN | CN

Business

Carmakers drive investment into Mexico

Wednesday, July 09, 2014 - 02:15

Mexico is currently enjoying a wealth of new investment as European carmakers take advantage of its low-cost location to tap into growing sales in North America. Hayley Platt looks at the reasons why.

▲ Hide Transcript

View Transcript

It's the 'M' in MINT - the next generation of economic powerhouses. And Mexico's booming auto industry is one of the reasons why. BMW is the latest car maker to move in - it's investing 1 billion dollars in a new plant. At the launch event last week BMW's production chief Harald Kruger explained why. (SOUNDBITE) (English) BMW PRODUCTION CHIEF, HARALD KRUGER, SAYING: "The plant's annual capacity of 150,000 units at the new plant in Mexico will enable us to tap into the gross potential of the entire region. The latest technologies and decades of experience, the combined know-how of our global production network will come together at the San Luis Potosi plant." The country's benefitting from a slowing economy in Brazil. Nissan, Volkswagen and Honda already have operations in Mexico. And Steve Fowler from AutoExpress Magazine says it also has a key selling point. SOUNDBITE: Steve Fowler, Editor, AutoExpress Magazine, saying (English): "The particular advantage with Mexico is that it has a free trade arrangement both North and South so it can export to the U.S. and to South America, both growing markets." It's location between North and South also helps. And with high demand for luxury cars still coming from the U.S building them all in Europe and Asia doesn't make sense. SOUNDBITE: Steve Fowler, Editor, AutoExpress Magazine, saying (English): "The problem in Europe is two-fold. The car market in Europe is still strong, yes the UK is doing well but elsewhere it's not quite so certain that there's going to be growth whereas there is a lot of growth elsewhere in the world. And also as a manufacturing base, it's quite expensive." Problems in other emerging markets is fuelling the trend. General Motors has just shut its South African plant because strike action is disrupting the supply chain. Mexico's factories have no major union issues - they're beyond the reach of the United Auto Workers union which operates in the Southern United States. Their workers also typically earn $2.50 an hour, almost 20 percent less than they do in China. By 2020 it's estimated Mexico will have the capacity to build one in four vehicles in North America - it currently builds one in six. And some are already calling it the China of the West.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Carmakers drive investment into Mexico

Wednesday, July 09, 2014 - 02:15