Japanese Automakers Find New Export Base, Opportunity In Mexico
Within four months of each other, Honda, Mazda and Nissan have opened new factories in Mexico, taking advantage of the opportunities within the nation’s automotive industry to grow a new export base into the United States, Latin America and Europe while also gaining ground in the rapidly expanding local market, all in direct challenge to the Detroit Three and other automakers on both sides of the border.
Automotive News reports Mexico will become the No. 1 exporting nation to the U.S. by 2015 at the earliest in large part due to the 605,000 units per year added by the three Japanese automakers. Meanwhile, Toyota will begin production in 2015 at Mazda’s newly opened Salamanca plant prior to deciding whether or not to build a new factory of their own. Nissan’s premium brand, Infiniti, may also set-up shop in Mexico.
In turn, the Japanese will see benefits from the move, from mitigating losses from a weaker yen in exports from home and greater profit due to cheap labor, to no tariffs on exports to the U.S. due to the North American Free Trade Agreement and improved product availability resulting from shorter distances between markets.
Speaking of free-trade agreements, Japanese automakers will also have access to some 44 countries and up to 40 million sales annually as a result of Mexico’s many agreements, allowing them to take on competitors in Latin America and Europe.
Finally, the Japanese have taken market share away from the Detroit Three in Mexico’s own automotive market, holding a collective 42 percent over Detroit’s 35 percent in 2013, when just four years earlier Detroit dominated with 57 percent of the market over Japan’s 23 percent.
One has to wonder if quality will go down.
Mexico is an excellent source of cheap cars for the US. Judging from personal experience with new '14 Nissan Versa Note fresh from Aguas Calientes, Mexico - outstanding value, although obviously not up to Japanese standards of assembly quality. Still, very good car, 80% Mexican content, including the engine and transmission.
I, for one, think this is a good thing! Employing more Mexicans at home not only raises their living standard but it keeps them from coming over here illegally and having to live an indigent lifestyle in squalor. It also precludes UAW interference by not locating in America and it preserves the spirit and intent of NAFTA to encourage free trade between member nations. Most of all, it improves the automaker's bottom line. In America, the unionized workers want to share in the profits but not in the losses, all without having to buy a share or stock in their employer. Such lobsided union-logic has seen two of America's automakers bite the dust. Why would the foreigners and transplants want that to happen to them? I think this is a great move on their part to move to Mexico. I wish more automakers assembling in the US, such as VW, would do the same. That sure would keep the UAW at bay and unable to harm the automakers.
Its a long time coming. Mexico is a good place to make cars. I suspect the cruddy cars VW turned out slowed the entry of other manufacturers who suspected it had something to do with the work force.