VW plans to manufacture its best-selling Golf hatchback in Mexico, part of its strategy to expand in North America.
The next-generation Golf will be manufactured at VW’s plant in Puebla starting with the first quarter of 2014. The model, historically manufactured at the automaker’s plant in Wolfsburg, Germany, will now be sold in North and South America.
“Volkswagen has ambitious growth plans and localizing production is crucial for these plans to work out,” said Daniel Schwarz, an analyst with Commerzbank AG in Frankfurt. “You can’t be successful in the mass-market segment if you only import cars.”
Producing the Golf in Mexico is only part of VW’s plan to expand in North America, where it will invest $5 billion in the following three years. As VW aims at becoming the world’s biggest automaker by 2018, expanding in North America is a crucial move to accomplish this goal. By producing the Golf in Mexico, VW will be able to avoid the dollar-euro currency fluctuations and benefit from lower labor costs.
“With its existing infrastructure, competitive cost structures and free trade agreements, Mexico is the ideal location to produce the Golf for the American market,” Hubert Waltl, the head of production at VW’s passenger car brand, said in the statement.