The Mexican government is predicting a 38% boost to vehicle production in the country over the next three years as more and more automakers build facilities there to use the country as an export hub. This would mean a one million unit boost over 2011's total production tally of 2.6 million units, according to Bloomberg News. The country is already the fourth-largest auto exporter in the world, and investments in new greenfield plants by Nissan, Mazda, Audi, and Honda will help it improve upon that title, according to the Mexican Automobile Industry Association (AMIA). "Other companies are exploring the possibility of opening facilities in Mexico," head of the nation's investment promotion agency Carlos Guzman said. "We expect a very good period of five to seven years in Mexico in terms of growing exports" for cars, he said.
Significance: Automakers are indeed pumping billions of dollars into Mexico to build new plants, especially Japanese automakers looking to expand their global manufacturing footprint outside Japan as a way to offset the rising value of the yen, which is eating into profits. But there may soon be a kink in these plans—as South American economies are slowing, protectionist measures are being put in place by key trading partners like Brazil and Argentina, making exports to these two countries problematic. That would make a major part of the reason for building plants in Mexico (exports to other Mercosur countries) suddenly evaporate—meaning Mexico had better get on the ball and negotiate some extensions to favorable trade relations, if it does not want to find itself losing investment to other countries in the near future.
