Mexico, a new hot spot for car manufacturers

More and more carmakers are planning or already making automobiles in Mexico, a country where quality production and lower costs go together smoothly.

Mexico’s automobile production is on track to reach a record 2.86 million units in 2012, according to researcher LMC Automotive quoted by Bloomberg. But more is on the way, as Honda is building its first large assembly plant in Mexico, Nissan adds a third factory, Ford produces midsize sedans and Audi opens the country’s first luxury vehicle plant in 2016. Add to that Toyota’s plan to source cars from Mazda’s Mexican plant starting in 2015 and the picture is crystal clear.

Mazda agreed to build a Toyota-branded subcompact car based on the Mazda2 hatchback at a $500 million plant the Japanese company is building in the central state of Guanajuato. The factory will supply Toyota with 50,000 units of the vehicle annually when production begins in mid-2015.

Mexico’s reputation for quality manufacturing and the country’s trade agreements covering 44 countries also make it an attractive export platform to ship cars to South America, Asia and Africa as well as the U.S. and Canada.

However, automakers in Mexico can face costs that cancel out the benefits, one being the cost from shipping cars to international markets. Another is drug-related violence which has claimed 57,449 lives since December 2006.