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Toyota: Expansion Plans in Mexico

September 10, 2014
Toyota: Expansion Plans in Mexico

The giant in global financial information, Bloomberg, recently published an item covering the continued expansion of Mexico’s automotive industry. Toyota, which at present does not have an entire final assembly plant in Mexico, is searching in the country for possible sites to build such a plant. In September, executives of the Japanese company met with Mexican officials to initiate discussions on this topic. The low cost of labor and large number of trade agreements entered into by Mexico has led the automotive manufacturer to view Mexico as a good location for investment. Toyota, which is the largest manufacturer in the world, finds itself following a number of other companies. Since June 2014, Kia Motors Corporation, Bayerische Motoren Werke AG (BMW) and a joint venture of Daimler AG and Nissan Motor Corporation have announced their intention to build manufacturing facilities, with investments in the one billion dollar range for each plant. Toyota already has a small foothold in the Mexican market with Mazda Motor Corporation, whose plant in Guanajuato produced its first automobile in January and is planning to produce 50,000 Toyotas per year. Toyota also has a small plant in Tijuana, which in reality serves as an assembler of the Tacoma model, the company’s small pick-up truck.According to Bloomberg, all manufacturers interested in the North American market are intent on expanding their capacity there, and Mexico without doubt is a strong candidate to provide such capacity. Michael Robinet, managing director and advisor at IHS Automotive in Southfield, Michigan stated, “Mexico is now the crossroads of the automotive trade in the Western hemisphere.” Toyota spokesperson Tania Saldaña stated that the company is evaluating potential investments in Mexico. If this occurs, total investment would reach on the order of ten billion dollars, as announced by President Enrique Peña Nieto when he took office in December of 2012. For 2014, investments will reach 3.2 billion dollars. The director of the Mexican Automotive Industry Association (AMIA), Fausto Cuevas, stated in September that “Mexico has proven to be an excellent automobile, auto parts and automotive components manufacturer.”For the time being, Toyota’s operations in Mexico are not yet comparable to those of Kia, which last month announced plans to build a one billion dollar factory that would produce 300,000 autos per year, or the commitment of Daimler-Nissan announced in June to jointly construct a plant costing one billion euros ($1.29 billion) in order to produce 300,000 compact units under the Infinity and Mercedes Benz brands. All of such investments will, according to Bloomberg, vault Mexico past Brazil as the top auto producer in Latin America by the end of the Year.

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