nbcnews.com
By Paul A. Eisenstein
American motorists are used to
driving imports. Brands like Toyota, Volkswagen and Hyundai account for a
solid majority of the U.S. market. But before you say "konnichiwa,"
(hello) to that new Honda Fit you might want to take a closer look.
Most of the models sold
by Japanese brands these days are actually built in North America — and a
growing number of those are coming from plants south of the border.
When it comes to automotive manufacturing, Mexico's production base is
growing nearly as fast as China's. Most of that is earmarked for export,
notably to the U.S.
Toyota this month
announced plans to build its first major assembly plant in Mexico, at a
cost of $1 billion. The company's North American CEO Jim Lentz said the
new plant is part of a "strategic re-thinking of how and where we build
our products."
Just last month,
Volkswagen AG said it would invest $1 billion to expand its sprawling
assembly complex in Puebla, a couple hours from Mexico City. And Ford
Motor Co. is expected to soon announce a $2.5 billion investment to
boost the capacity of its various Mexican operations, including two
assembly lines and an engine plant.
A quick rundown of the
list of major global makers reveals that few have not already begun
investing in Mexico. Those who have yet to set up shop are racing to
open up their first plants - a list including Toyota, Kia, Audi and
Mercedes-Benz.
'Spectacular growth'
Even
before the latest plans were revealed, automakers from around the world
had committed to investing $20 billion in the Mexican automotive
production base over the last five years, according to the Mexican
Automobile Industry Association, or AMIA.
"The growth in
production and in exports has been spectacular," Eduardo Solis, the
trade group's president, said earlier this year. "The growth reflects
the confidence the industry has in our country."
There are a variety of
reasons why Mexico's auto industry is booming. Sales are on fire; local
demand is increasing at almost double the rate of the U.S. automotive
recovery. That said, Mexicans are expected to purchase less than 1.5
million vehicles this year, hardly enough to justify the huge spate of
investments.
"The growth in production and in exports has been spectacular."
The
bulk of the rapidly growing production base is targeted for export --
about 2.9 million of them this year, AMIA forecasts, with 70 percent
headed for the U.S.
Manufacturers benefit
from extremely low labor costs, generally about $10 an hour for wages
and benefits, or 20 percent of U.S. costs. But they also take advantage
of the fact that Mexico has negotiated free trade agreements with 54
countries, more than any other nation except Israel.
"Mexico is a great place
to make a reliable investment," said President Enrique Pena Nieto as he
helped Nissan dedicate its third assembly complex, in Aguascalientes,
in November 2013.
Like the majority of the
Mexican auto plants, it focuses on small vehicles which can become much
more competitive thanks to low labor rates. Along with the Nissan
Sentra, Mexican plants roll out models like the Honda Fit, the
Volkswagen Golf, Chevrolet Cruz and, in a couple of years, the compact
Toyota Corolla which is currently being assembled in Canada.
Change coming
But
that is about to change. As part of a growing partnership between
Daimler AG and the Renault-Nissan Alliance, the German automaker will
help set up a second assembly line at Nissan's Aguascalientes plant. It
eventually will produce both Mercedes-Benz and Infiniti models.
"Our biggest project
yet, it takes our partnership to the next level," noted Dieter Zetsche,
the Daimler CEO and head of the Mercedes brand, during a joint news
conference held with Nissan's chief executive Carlos Ghosn.
Audi, meanwhile, is
setting up a plant of its own an hour away from its mainstream sibling
Volkswagen's facility in Puebla. The luxury maker is optimistic: "We may
even double production" in the near-future, suggested Audi AG Board
Member Berndt Martens during a tour of the partially completed site.
The launch of new luxury
models has raised concerns about whether Mexican assembly plants can
match the quality of lines in the U.S., Europe or Asia. But data from
the likes of J.D. Power and other research firms has shown little to no
quality gap.
And that means that the growth of Mexican auto imports will likely only to continue expand in the years ahead.
MEXICO CITY
– The Mexican navy’s training ship, Cuauhtemoc, set sail from the Pacific port
of Acapulco on a cruise that will take it to 14 ports in 13 countries, the Navy
Secretariat said.
