Mexico becomes an important automotive hub image

While the Central American country has no local auto manufacturer, it has lately become a very important manufacturing hub, due to low labor cost, a very good supplier system and easy access to exporting cars to the US, South America and Europe.

According to ProMexico, an economic development arm of the Mexican government, besides the well known North American Free Trade Agreement, signed by US President Bill Clinton two decades ago, Mexico also has another 10 free trade agreements, covering no less than 43 countries – a move that allows them to export without paying taxes.

“It’s a masterpiece of economic development,” said Sean McAlinden, senior economist for the Center for Automotive Research. “Mexico is the largest non-indigenous auto industry in the world, it will be twice the size of Canada in vehicle production by 2016,” McAlinden added.

In less then a week, two major global automakers, Honda and Mazda, opened two manufacturing facilities in the country, and between 2013 and 2015, automakers from Volkswagen to Chrysler are set to invest here another $6.8 billion.

Also, according to Mike Jackson, director of IHS Automotive’s North American vehicle production forecasting, Mexico’s automotive production is set to jump to 4.5 million cars each year in 2020, from around 2.9 million now.