MEXICO CITY—In the big scheme of global auto industry investment, Mexico has been a phenomenon with few equals.
Mexico continues reeling in foreign direct investment by automakers and suppliers. The capital movement is leading to higher vehicle production, more exports and a rising income level that – in turn – is fueling a double-digit growth of domestic car and trucks sales.
What is Mexico doing right?
And just as important, will its story now be derailed by the flare-up of trade friction with the United States?
Ildefonso Guajardo, Mexico’s economy minister, is not worried. Guajardo thinks Mexico is positioned to become the world’s fifth-largest auto producing-nation by 2020, with five new auto plants opening in the 2016-2019 period. Industry analysts agree that Mexico’s upward trajectory in manufacturing will continue at least until the end of the decade, based solely on already-announced investments.
Guajardo says the country’s success comes from a combination of robust government support for the auto industry, free-trade agreements with dozens of nations around the globe, strong logistics and low production costs.