Honda and Nissan seem ready to make Mexico become the largest exporter of autos to the neighboring US, giving the Japanese banks also a chance to enter the country’s market.
The Japanese banks also seem ready to jump the boat as their country is the world’s lowest profit yielding market in the world: the median interest rate for commercial loans in Japan is 0.887 %, while in Mexico it’s 8.1 %.
“We want to charge a lot more for Mexico-oriented loans than for those at home,” said Fuminori Matsushita, the general manager for international business promotion at Shizuoka Bank. “How much more we can charge to reflect the country risk for Mexico depends on individual negotiations.”
According to data from Bank of International Settlements, Japanese banks lending foreign currency in Mexico went up by 34 % to a record $17.6 billion in September last year.
The situation is triggered by the rising local production by Japanese automakers, who use Mexico to shade from currency shifts, save costs thanks to low employment wages and use the country’s extensive commercial agreements network to boost exports. The last plant opened by a Japanese automaker was just last month, when Honda inaugurated a $800 million facility in Celaya, Mexico.