VW Opens Engine Plant in Mexico image

VW opened a new engine plant in Mexico, part of its North American offensive.

After VW unveiled a SUV at the Detroit auto show, a rival for Ford’s Explorer, CEO Martin Winterkorn opened the $550 million engine plant, located in Silao, northwest of Mexico City.

“With this new plant, we are driving our ambitious North American offensive forward,” Winterkorn said at the factory opening.

The Silao engine plant will supply the other VW assembly plants opened in North America with 330,000 engines annually, and marks the German automaker’s 100th production site. According to consultancy Oliver Wyman, this year VW will have 77% of its production capacity outside Germany, surpassing GM’s 76% and Toyota’s 59%.

Opening this plant in Mexico, is a solid proof of VW’s plan to become the world’s largest automaker by 2018 and the first step in achieving its goal is to focus more on GM’s home market in order to surpass the US automaker. As the US market helps VW make up for the loss in Europe, the automaker plans to invest here $5 billion in the following three years.

“Volkswagen has a lot of catching up to do in the U.S.,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “They won’t reach their 2018 goals if they don’t get stronger” in North America.