Automotive manufacturing Mexico has a long history. In the past 100 years since Buick established the first automotive manufacturing facility and today parent company General Motors is the top auto producer in the nation- the country has set up a robust automotive production ecosystem. In fact, automotive manufacturing in Mexico has become stronger and better. Analyzing, in 2005 when National Institute of Statistics and Geography in Mexico started publishing stats on the vehicle exports only six big car production companies worked here. By 2011, Fiat and Toyota also joined in. Today, Kia, BMW, Audi and Mazda also established their Mexican production operations.
In 2017, it was calculated that cars added to 11% of the total exports of Mexico, vehicle parts added up to 6.7%. this makes an aggregate value of $112 billion in cars and spare parts, making Mexico, the fourth biggest automobile exporter in the world. In 2018, the automotive sector became the biggest contributor to the production GDP of the nation.
Why do automotive companies choose to produce in Mexico?
In reality, there are several reasons why the major automotive manufacturers have a presence in Mexico and the country has been labeled as the new capital of the automotive sector. It is famous for its accessibility of laborers trained in complex assembly, able to work at affordable wages. It’s closeness to the largest vehicle importer of the world is another reason for automotive companies to set their operation in Mexico. Also, the government of Mexico offers several incentives to appeal the producers.
As per the Center for Automotive Research, the robust network of free trade agreements in Mexico functions as an attractive worldwide export base. As per the record, the FTAs of Mexico causes savings of over $4000per vehicle in exporting a car of $25000 to the EU. The tariff is calculated depending on the value of the vehicle.
Automotive supply chain
Mexico has an efficient network of suppliers built over centuries to support automotive manufacturing offering high quality products.
Robust automotive clusters have developed all through the nation to ease the supply chain and support local producers. Usually the supporters are sited in one of the many automotive clusters spread all over the country.
Nine of the clusters recently signed a contract to advance a National Automotive Clusters Network to enhance their value. The goal is to strengthen the auto sector by sharing right performance processes.
The states of Queretaro, Guanajuato, Celaya etc. form a production powerhouse which has multiplied manifold from 2013 to 2020.
The automotive sector will continue to grow
Depending on the present trajectory, automotive manufacturing Mexico will continue to rise, especially with the growth of global trading. More and more companies are aiming to set their facilities in Mexico because of several allurements.
As car manufacturing companies adapt to shift low-cost manufacturing, invention, customer demands and market closeness will play a major role in helping automotive producers stand separately.
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Well, the biggest benefit of automotive manufacturing in Mexico is that you aren’t doing it alone. To diversify your footprint here, contact American Industries Group today.