Mexico is slowly growing to be the sweet spot for manufacturing auto parts for the automotive giants ruling the industry. Industry stalwarts such as Toyota (TM, Financial), Volkswagen (VLKAY, Financial) and General Motors (GM, Financial) are already on their plan of action to increase their production capacity in Mexico which happens to be a cheap labor destination for automotive production. Quite recently, in a Reuters report it has been mentioned that U.S. automotive giant Ford Motors (F, Financial) would announce its investment of around $2.5 billion in Mexico this year. Let’s take a sneak peek into the facts that have been highlighted in the latest report with respect to Ford’s strategic move in Mexico.
Adding fuel to the production race
Industry sources have stated that if Ford invests about $2.5 billion in Mexico, it would mark the latest multi-billion dollar outlay in the country’s booming auto sector. In fact, news sources have confirmed that its immediate rival, Toyota is about to spend $1 billion to build its new factory in Mexico for producing 200,000 cars on an annual basis. Hence, this move of Ford might be a strategic move to stay ahead in the competitive race.
The last major investment in Mexico of Ford dates back to 2008 when it had invested to the tune of $3 billion that was majorly used for updation of its Cuautitlan plant in central Mexico for production of its popular Fiesta model. According to officially shared industry figures, Ford happens to be the fourth-largest auto exporter in Mexico selling around 108,417 units abroad in the first quarter. And notably most of the production from Mexico is exported to the U.S.
Sources claim that on this Friday, Ford will announce the investment in Mexico City to celebrate the 90th anniversary of its presence in the country. Furthermore, as per the recent Reuters report, Ford would be investing $1.3 billion to expand the plant in northern Chihuahua state where it proposes to build two diesel engines while it would put the remaining $1.2 billion for constructing a transmission plant in central Guanajuato state.
However, none of the Ford officials have commented when asked on their plan-of-action with regard to the Mexican investment that’s likely on the cards. Instead they have stated, “We cannot comment on future product or manufacturing plans…”
But there are widespread rumors that the announcement to be made by Ford this Friday would also confirm its plans on building Ford’s 1.5-liter turbocharged four-cylinder Ecoboost gasoline engine in Mexico for the first time. Presently the 1.5-liter engine is being built in the U.K. and China and moving or enhancing such engine production to the Mexican plant will surely be seen as an advantage for the automaker.
Going forward
Mexico has gradually grown to be the magnet for automotive investment as the auto industry continues to grow and increase capacity to meet the improvement of demand from the car buyers across the globe. Also, as the cost of production in Mexico is lower than in the U.S. and several other international locations, automakers have flocked to the country to produce more vehicles while curtailing their production costs. Ford already has a solid presence in Mexico and such a move will enhance its stand further, when compared to its immediate contenders in the automotive industry. Let’s wait until this Friday to find out whether the management makes such an announcement which is all in rumors right now. So, let’s keep an eye on what happens on Friday when Ford celebrates its 90th anniversary in Mexico.
