GUANAJUATO, Mexico--Mexico is developing into a strategic base for Japanese automakers wanting to expand into North and South American markets.
With a geographical position that makes it a good foothold for Japanese makers to make inroads into growing South American markets and membership in the North American Free Trade Agreement, which gives it tariff-free access to the rich markets of the United States and Canada, billions of yen are being channeled into new plants in the country.
Honda Motor Co.’s President Takanobu Ito told a groundbreaking ceremony for the company’s second assembly plant in Mexico on March 28 that the Mexican market itself had potential but that the company also saw the country as an important bridgehead into the wider region.
“We also have high expectations for the country as an exporting base for the North American market,” he said.
Honda plans to invest about $800 million (65.73 billion yen) to produce 200,000 a year of its subcompact Fit model at the plant, which is expected to go into operation in the spring of 2014. That will more than quadruple Honda’s production capacity in Mexico to 260,000 vehicles.
Ito indicated that capacity could eventually expand to 400,000 units, with the construction of another factory on the 5.66 million-square-meter Guanajuato site under consideration.
Nissan Motor Co. is also making Mexico a major production base, with an eventual capacity of over 1 million vehicles a year in its plans.
In 2011, it produced a record of more than 600,000 vehicles in its two Mexican plants, and announced plans to build a third factory this January.
Mazda Motor Corp.--which has been struggling with a fall in the profitability of its exports because of high production costs in Japan--also plans to spend about 40 billion yen ($487 million) to construct a plant with an annual capacity of 140,000 units in the central Mexican city of Salamanca.
Mexico’s rise has been so dramatic that concerns have have been raised in Brazil it might hurt that country’s own car industry, leading to an agreement earlier this month to put a cap on the value of exports from Mexico to Brazil for the next three years.
(This article was written by Toru Hatanaka and Kaname Kakuta.)
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