Mexico’s federal government competes aggressively with infrastructure programs intended to bring down the logistics costs of manufacturing in an undeveloped automotive corridor. The country also provides worker-training programs and engineering scholarships to bring universities and automotive companies together.
Individual Mexican states offer their own tax incentives and project-specific infrastructure commitments that reach into the hundreds of millions of dollars.
That public investment is paying off.
Last year, Mexican factories produced nearly 3.5 million light vehicles, a record volume that made Mexico the world’s No. 7 auto-producing nation, according to government and industry data.
About 2.8 million of those vehicles were exported.
The Mexican Automotive Industry Association estimates that new assembly plants under construction – along with expansions of current ones – will push overall production to around 5 million units by the end of 2020.
Kia joined the Mexican assembly club in 2016 with its first local plant, an investment of $3 billion. BMW will open a new factory to produce the 3 series, and a luxury-vehicle venture between Mercedes-Benz and Infiniti is scheduled to launch late this year. Toyota, which currently builds the Tacoma pickup in Tijuana, will open a Corolla car plant in 2019 in central Mexico.
Auto parts exports were even higher than the $42 billion worth of autos shipped to the U.S., according to the National Automotive Parts Manufacturing Association, or INA for its Spanish-language initials. Mexico’s suppliers exported $63 billion in auto parts last year just to their biggest customer – the United States.
“Mexico has demonstrated its global quality by breaking records for production and exports,” said Rogelio Garza, the deputy economy minister, speaking at Mexico’s International Automotive Industry Congress in June.
“Mexico can count on companies that have successfully inserted themselves into the production chain, elevating the value-added of its products, increasing the technical capacity of its workers and transforming the panorama of the national industry,” Garza said.
Industry analysts at the automotive congress said automakers and government officials are currently working to lure more Tier 2 and Tier 3 suppliers to Mexico to bolster just-in-time operations.