Mexico: auto sector ramps up the economy as investors bring $20 billion image

During the past five years no less than half a dozen auto plants have been built or announced for central Mexico’s industrial belt, driving the nationwide investment level to $20 billion by global automakers.

The carmakers have chosen Mexico because of its easy access to the United States, low wages and numerous export trade agreements – including with overseas regions. Mexico’s auto exports are predicted to grow to a record new high this year – 2.9 million units. Naturally, at least 70 percent of the cars and light trucks are going up north in the United States, says the Mexican Automobile Industry Association, or AMIA. For December alone exports jumped 21 percent over the same period of the previous year, to 195,091 vehicles. “The growth in production and in exports has been spectacular,” commented Eduardo Solis, the AMIA’s president.

Trade group INA also puts Mexico as the globe’s sixth-largest manufacturer of auto parts, with deliveries worth an estimated $81.5 billion last year. The soaring auto industry has turned Mexico’s manufacturing prowess into one attractive to investors, with many experts believing the country’s economy could outperform the rest of Latin America in 2015. For automakers, Mexico is particularly attractive because of its low priced labor – according to Luis Lozano, a partner at PricewaterhouseCoopers in Mexico City the country’s auto employees have on average 20 percent lower salaries than US autoworkers. The Mexican manufacturing surge is also anchored in the auto production, with a 10 percent increase in total output last year over 2013 and estimated to tally 5 million vehicles by 2020, according to AMIA.

Via Bloomberg