One of the big focuses of manufacturing in Mexico is the Automotive Industry. More than 1,1000 Tier 1 manufacturing companies have invested in setting up stamping, assembly and auto manufacturing plants in Mexico, positioning the country as the largest supplier of auto parts to the United States and an automotive global export platform.
Companies such as GM, Ford, and Chrysler, the leading German carmaker Volkswagen, and major Japanese companies such as Nissan, Honda, and Toyota operate assembly plants in Mexico, and together produce 40 car models in the country benefiting from higher profit margins, close proximity to business hubs, good infrastructure and price competitiveness by manufacturing in Mexico.
The Automotive industry in Mexico is growing at a tremendous pace due to significant demand from potential markets. The output for vehicles in Mexico has reached a record figure of 1.23 million vehicles, as verified by the Mexican Automobile Industry Association (AMIA). This has boosted the Mexico's economy since the revenue earned by this sector far exceeds the revenue earned from the export of crude oil or tourism.
Many economists speculate that the Mexico automotive manufacturing industry will continue to progress in the coming years and expect the production to reach 2.4 million units by the year 2014.
The Automotive Industry in Mexico is listed in the top ten largest exporters of the world. In 2008 this industry was the largest supplier of auto parts to the US, exporting 80% vehicles. By 2020, sales are expected to reach 120 billion dollars.
At Co-Production International we help by offering comprehensive administrative and compliance services for companies planning to invest in the region. We understand Mexico's potential and the opportunities it holds for the auto parts manufacturers. These manufacturers will be able to lower their manufacturing costs by 25% as compared to the costs they currently incur in the US. This is the reason companies like; Ford, GM and Honda have already announced expansion plans in Mexico and leading OEM's have established assembly plants in the region.
Around 1,100 companies manufacture different auto parts such as:
- Sheet metal
- Brake systems
- Light duty motor vehicles
- Seating and interior products
- Gasoline & engine parts
- Electrical components
Auto part manufacturing is done in more than sixteen states in Mexico
This region is attractive to foreign investors due to its strategic advantages and NAFTA agreements. A greater flow of investment is expected in the automotive sector as trade agreements have been signed with more than forty countries. This industry attracts USD $2 billion per year in direct foreign investment. Another attraction to Mexico is its highly diverse workforce, which can be hired at wages up to 80% lower than the wages in the U.S.
Mexico's automotive industry is characterized by:
- Integrated manufacturing operations
- Diversified workforce
- The presence of OEMs; (Passenger vehicles, Commercial vehicles & Engines)
- Proximity to California and North American markets
- Export oriented industry steered by automotive engineering, product design, testing & R&D
- Presence of Northern Cluster, Baijo Cluster, Central Cluster
- Manufacturing flexibility
- Low shipping costs and stable exchange rate
- Pro-business environment
- Minimal time to reach market