The well-known U.S. car maker, General Motors (GM, Financial), is now trying to shift its focus towards manufacturing its new model of Chevrolet Compact at the Mexican production facility. Well, it is to be noted that other reputed car manufacturers like Toyota (TM, Financial) and Volkswagen (VLKAY, Financial) are also trying to shift their manufacturing base to Mexico and are investing hugely in the country to take advantage of the cheap labor available in the Mexican region. Let’s quickly dig in and find out what plans General Motors has with respect to improving its production numbers at the Mexican facility.
The game plan
On March 23, the company confirmed that it’s looking out to take the ultimate advantage of cheap labor as well as free trade agreements in North America. In pursuit of such interests, the U.S. automaker will invest about $350 million to produce the new Chevrolet Cruze at the Coahuila Ramos Arizpe plant in Mexico. This represents a portion of the $5 billion investment General Motors plans to make for expanding its operations at the Mexican plants as per announcement made last year from the company headquarters which highlighted the automaker's expansion plan from 2013 through 2018 in the country.
Ernesto M.Hernandez, president and CEO of GM Mexico, stated, “This investment, part of the $5 billion announced last December for the whole country, strengthens the presence of GM Ramos Arizpe in the production of our company worldwide and, of course, will consolidate Mexico as the sixth producer of cars for GM, with 7 percent of global production…”
In the previous year, the company has sold around 7,870 units of the Cruze model in Mexico, and in fact the sales of the vehicle did decrease around 15% in 2014 when compared to 2013 sales data provided by the Mexican Association of Automobile Distributors and the Mexican Automotive Industry Association.
Presently, the Cruze is primarily built in South Korea and imported to Mexico. But after the new model of Cruze starts getting manufactured at the Mexican facility, this model will be manufactured to meet the domestic demand and no further imports will be applicable.
Besides Mexico, the automaker intends to continue with the Cruze production at its Lordstown, Ohio plant and also urges to introduce the manufacturing of the new model in China. And Mexico provides a lot of opportunities for the global automaker as there is high demand for compact cars in the country’s domestic market. This news marks a great achievement for General Motors since the Cruze would be manufactured in Mexico for the first time to cater to domestic market needs, and thereby improve the Cruze sales volume for the auto maker in the country.
Hence analysts are of the opinion that this is a right move that has been taken by General Motors with the Chevrolet Cruze production expanding to Mexico, where its next-generation model would get built.
Parting word
With the production of the new Cruze in Mexico, General Motors looks poised to grow its manufacturing facilities in the country. This way, General Motors wishes to garner better market share in the country where its rivals namely Toyota and Volkswagen are also quickly spreading their wings.
