Mexico isn’t just breaking monthly records for automotive production and vehicle exports. Latin America’s second biggest economy after Brazil is showing it can market and sell cars, not just build and ship them to other countries.
Nissan Motor Co., the leading seller of cars in Mexico, said it is helping large Mexican dealer groups to buy Nissan stores in Houston, Los Angeles and in the San Francisco bay area. The strategy is using the expertise of Nissan dealers in Mexico to court more Hispanic consumers to the brand in the U.S. Nissan is Mexico’s retail market leader.
Among the first Mexican retailers to make inroads in the U.S. is Grupo Autofin Mexico, which has bought Nissan dealerships in San Juan Capistrano, Garden Grove and Irvine in Orange County, south of Los Angeles. Grupo Autofin’s sales totaled $1.4 billion from its 60 Mexican dealerships last year. Nissan is the country’s market leader.
Last month, Mexican auto production grew 6.8% to 266,424 cars and light trucks, as exports rose 15.2% to 204,907 vehicles, according to the industry’s trade group. Last year, production in the country topped three million for the first time.
Mexico’s status as the hemisphere’s rising automotive powerhouse, driven by lower costs and favorable trade agreements, has caused tremors in Canada and even in the U.S., two countries that haven’t seen the opening of a new assembly plant for five years. Many automotive parts suppliers are increasing investments in Mexico, while shutting down or trimming production in the north.
Factories in Mexico “can serve the southern U.S. market just as easily as we can service the northern U.S. market,” Paul Boothe, a professor at the University of Western Ontario told The Globe and Mail.
As the U.S. population migrates toward the Sunbelt, U.S. motorists and the new Mexican factories are moving closer to one another. Last year, automotive manufacturers announced $7 billion of new investment in the country, including $3.6 billion for three assembly plants, according to the Center for Automotive Research in Ann Arbor, Mich. Mexico accounted for 19% of North America’s production, compared with 14% for Canada, with the remainder in the U.S.
The latest announcement came in August from Kia, the South Korean affiliate of Hyundai, which said it will erect a $1 billion assembly plant near Monterrey that can produce 300,000 vehicles annually. By the end of the decade, Mexico will have the capacity to make four million vehicles annually.
Brazil, whose auto industry has been surpassed by Mexico’s, has ambitions of its own—despite the current economic recession—to add capacity and is in the midst of planning or finishing several new automotive manufacturing complexes. Fiat Chrysler’s new assembly plant in Pernambuco is expected to open this year.
Mexico’s flourishing automobile industry has been a feather in the cap of its president, Enrique Peña Nieto, who has unfurled the welcome mat to foreign automakers. The results have confirmed the confidence of companies from Audi to Toyota in the country’s industrial competitiveness.
