The Mexico’s car boom has just hit full gear, as it is set to pass Japan and Canada as the United States’ No. 1 source of imported cars by the end of next year. The manufacturing boom in Mexico is the auto industry into a bigger source of dollars than money sent home by migrants.
The Mexican car boom is raising hopes that Mexico can create enough new jobs to pull millions out of poverty as northbound migration slows sharply, but critics caution that most of the new car jobs are low-skill and pay too little. Mexico’s low and stagnant wages have kept the poverty rate between 40 and 50 percent since the passage of the North American Free Trade Agreement two decades ago.
Mexico’s Car Boom
According to Auto News, “Honda is also investing in Mexico, and so is Mazda. Others are eyeing the region as a carmaking location. The Detroit 3 have been there forever. Parts suppliers are newly investing there. Mexico is booming and beckoning.”
The American-Mexico Embassy reported, The automobile industry represents approximately 3.6% of Mexico’s GDP, 14% of manufacturing output and 23% of total exports. Mexico exports 82.9% of its total vehicle production.
An $800 million Honda plant that opened Friday in the central state of Guanajuato will produce more than 200,000 Fit hatchbacks and compact sport-utility vehicles a year, helping push total Mexican car exports to the U.S. to 1.7 million in 2014, roughly 200,000 more than Japan, consulting firm IHS Automotive says. And with another big plant starting next week, Mexico is expected to surpass Canada for the top spot by the end of 2015.
“It’s a safe bet,” said Eduardo Solis, president of the Mexican Automotive Industry Association. “Mexico is now one of the major global players in car manufacturing.”
When NAFTA was signed two decades ago, Mexico produced 6 percent of the cars built in North America. It now provides 19 percent. Total Mexican car production has risen 39 percent from 2007, to nearly 3 million cars a year. The total value of Mexico’s car exports surged from $40 billion to $70.6 billion over that span.
The Associated Press also contributed to this report.
Mexico Car Boom: Mexico is Set to Pass Japan as America’s No. 1 Source of Imported Cars.