Mazda has barely thrown off the shackles of Ford, but the Japanese already make their new freedom felt. In a way that won’t make Ford happy.
Mazda and their new largest shareholder Sumitomo will spend anywhere between $350m and $475m, and will open a plant in Mexico that will start making lots of little Mazdas as early as 2013. According to The Nikkei [sub], Mazda will build its bread & butter Mazda2 and Mazda3 models in Mexico. They will not be shipped north. The cars are destined for the Mexican, Brazilian, and other Central and South American markets. Mazda will initially make some 100,000 units there, later more. An engine plant is also in the cards.
This marks a series of firsts for Mazda.
- It is Mazda’s first new overseas production base since they opened a plant in Thailand in 1998.
- All previous plants, in the U.S., China and Thailand, had been run jointly with Ford.
- Mazda will hold a majority stake in the operating company — something it has never done before. Sumitomo will lend a hand in the management.
Mazda will also be treading on an in-house Monroe doctrine somewhere at Ford, and will be interfering with growth markets in the Southern Hemisphere. That will cause joy in Dearborn.
Mazda has big plans down south. They sold some 50,000 cars in the region last year, only 4.5 percent of global sales. The company wants to sell 1.7 million units worldwide in 2015, up 30 percent from now. A lot of this growth is expected from South America.
Why Mexico? Mexico has an economic partnership with Mercosur, a full customs union between Argentina, Brazil, Paraguay and Uruguay. Like its European counterpart, Mercosur is expanding. Bolivia, Chile, Colombia, Ecuador and Peru are associate members. Even Israel and Egypt joined. A plant in Mexico lowers customs barriers to these countries.
What’s more, tariffs on autoparts exported from Japan to Mexico will disappear in 2014 under a bilateral economic partnership agreement. Japanese manufacturers such as Toyota, Nissan, and Honda, which already are in Mexico, will be able to further lower their cost there.