The growth of automotive manufacturing in Mexico

According to The Financial Times, Mexican automotive manufacturing is set to grow in the coming years. It is predicted that the annual number of vehicles produced will rise from 2.9 million in 2012 to about 4 million in five years. Indeed, Mexico is positioned to dominate the higher-end manufacturing market, despite China's aspirations to fill that role. Automotive manufacturing in Mexico is largely for global export, though companies that manufacture there also wish to sell there.

Toyota Motor Corp. is considering expanding its production in Mexico for just this reason. At a press briefing in Mexico, Toyota board member Mark Hogan said the brand's 5 percent penetration into the Mexican car market represented underperformance compared to the brand's reputation and expectations in the country, according to Automotive News. Opening an additional plant in Mexico would put Toyota in an ideal position to remedy this. Additionally, there is only one Toyota vehicle sold in the North American market that requires components produced in Japan; the rest can be manufactured anywhere. Moving production of more automobiles to North America would shorten supply chains and reduce manufacturing costs.

Manufacturers of cars and car parts find Mexico a hospitable country in which to do business. Its proximity to the U.S. means exporting automobiles to that market is easy and cost-effective. The cost of facilities, labor and materials can be drastically reduced by working with a shelter company in Mexico, as well. As a business decision, expanding to Mexico is often a wise move for automobile manufacturers. Many employ the services of a shelter company to help them navigate local regulations and processes like recruiting and worker's compensation. As Mexico grows in importance as a center of automotive manufacturing, more companies are finding precisely why so many manufacturers choose to maintain operations there.

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