#Mexico

Just as we predicted, Audi has chosen Mexico as the site of their newest manufacturing plant. A specific site for the plant will be selected later in the year, with production of an unnamed SUV ( said to be the Q5) starting in 2016.

With a meeting for Volkswagen’s supervisory board looming on Wednesday, a decision regarding Audi’s newest North American factory will likely be made. Two choices are available, but the key word seems to be North America.

Rumors of Audi starting U.S. production have been floating around for a while. Tennesseans in Chattanooga had hoped Audi would move in with Volkswagen. These hopes have been dashed over the weekend. Germany’s Spiegel report s that Audi will get its own plant in Mexico.

Nissan’s upscale Infiniti cars can only be bought outside of Japan, but most of the cars are made in Japan. That will change, said Nissan CEO Carlos Ghosn in New York.

Honda will build its Fit compact at the new Honda factory in Mexico, from where it will be exported to the U.S. and other markets. This is what the company told Hans Greimel, Automotive News [sub] rezident in Tokyo.

While Honda and Mazda are just getting their respective footholds in Mexico (the two automakers are opening up respective assembly plants in Mexico), Nissan has had a long presence south of the border, building cars at its Augascalientes, Mexico plant for decades.

The Mastretta MXT is not very well-known outside of Top Gear buffs who recall Jeremy Clarkson giving the MXT an incredibly hard time for its Mexican heritage. Of course we all know Jeremy is a shock jock more than a motor head these days, so his opinion aside the MXT slots in right behind the Doking as one the more interesting cars on display in Los Angeles. The MXT is the first sports car designed and built-in Mexico, but rather than trying to dethrone Corvette or Mustang, Mastretta is going for the niche market of small, light kit cars. Yes, kit cars. At least north of the border…

Around the time of the founding of the United States, the Mexican state of Guanajuato became home to of the one of the biggest silver mines in the world, which produced as much as 2/3rds of the world’s supply of silver at its peak. Today it’s not precious metal that’s driving Guanajuato’s booming economy, but cars, as the world’s automakers flock to Central Mexico. Between 2005 and 2008, GM, Ford and Michelin dumped $1.8b into production in the state, and the expansion is still picking up steam. In the last year, Volkswagen invested $800m in engine production capacity in Silao, Pirelli built a $210m facility and Mazda just revealed it would build a new compact car plant there in June. Toyota is said to be the next to set up shop in Guanajuato, but for the moment Honda is the latest automaker to announce new operations in Guanajuato, as Automotive News [sub] reports the Japanese automaker will spend $800m on an assembly plant there. Honda, which is fleeing a strong yen which has battered Japanese exports, will start building 200k subcompacts per year in 2014. Clearly Guanajuato’s got it’s automotive mojo flowing… but are the days of new Japanese transplant factories in the US over? Is it only a matter of time before the coyotes start smuggling Detroiters into Silao, Celaya, and the Puerto Interior??

Japanese carmakers are watching the rising yen and falling dollar with great trepidation. Most have the yen at 80 or above in their plans. Today, the greenback buys just 77 yen. “The soaring yen is forcing major Japanese companies to rethink their assumed exchange rates for the current fiscal year,” writes The Nikkei [sub] today, and adds: “Reviews of assumed rates could also accelerate the transfer of production bases overseas.” Honda does just that.

It was quite a coincidence when, just last week, Audi restated its interest in US production facilities on the same day that the UAW announced it was in talks to possibly organize VW’s new Chattanooga plant. At the time we noted that

With Audi execs insisting on the need for more US production capacity, a UAW win in a Volkswagen vote could have serious implications for the firm’s future expansion.

Turns out, it didn’t even have to come to a vote. Just over a week after CEO Rupert Stadler insisted that “It is totally clear that we need new production capacity in the U.S,” Audi has suddenly decided that things look nicer in union-free Mexico. Automotive News [sub] reports that Stadler wants a new Mexican plant to build the Q5 SUV, but notes that

it was still unclear if Stadler would have his way in the face of opposition from some of Volkswagen’s top managers, who wanted Audi to make use of the new VW plant in Chattanooga, Tennessee.

Did the UAW’s sudden announcement that it was in talks with VW’s global works council about organizing Chattanooga have anything to do with the decision? AN [sub] won’t say, but the timing can’t be ignored. Audi’s US production may just have been the first victim of the UAW’s transplant organization campaign.

Mexico was one of the last markets to build the old VW Bug. The really old one. Mexico remains the center of Beetle-mania. Volkswagen officially began production of the new Beetle in Puebla, Mexico.

Mazda has confirmed [to Reuters via Automotive News [sub]] what has been rumored for a while (especially in the Mexican media): open a new plant in Guanajuato, Mexico, near VW and GM’s Silao facilities. Production starts this fall and the line starts rolling in 2013, according to “people familiar with the matter.” In the meantime, Mazda6 production at the Flat Rock, MI joint venture plant continues until mid-2012, at which point Mazda will make a decision that it’s still “studying,” but it won’t be building the Mazda6. Interestingly, Mazda’s new Mexican plant is only being built for “at least” 50k units of

compact cars, initially for sale in Mexico and South America, and eventually export to North America.

Could the next-generation of Mazda midsizers be hecho en Mexico as well? It’s possible, but we won’t know until Mazda announces more details about the new factory. Meanwhile, nobody’s expecting Mazda to hang around Flat Rock… least of all Ford.

With new compact and subcompact models from Ford and GM enjoying respectable sales, the mainstream media has been indulging in some “feel-good” headlines, like the New York Times’s Detroit’s Rebound Is Built on Smaller Cars, or CBS’s more equivocal Can small cars rebound U.S. auto industry? It’s an understandable instinct, as the media has long battered Detroit’s inability to build competitive compact and subcompact cars, and in the post-bailout atmosphere of redemption, these headlines definitely help reassure Americans about the value of their “investment.” Unfortunately (if unsurprisingly), however, these pieces gloss over the full truth of the situation. Yes, Ford and GM are enjoying improved sales success with small cars. The “U.S. auto industry,” on the other hand, isn’t actually getting all that much out of the situation, beyond some fluffily positive press. Here’s why:

Under the terms of its contract with the US Treasury, Fiat will get an additional five percent of Chrysler Group’s equity when it builds a 40 MPG (CAFE, not EPA, so actually about 30 MPG) vehicle in the US. But it turns out that Dodge already sells a car that might qualify… unfortunately, Dodge doesn’t actually build it, offer it in the US, or, starting with the 2012 model year, even bother to rebadge the thing. That’s right, you’re looking at a 2012 Hyundai Dodge Attitude… the only non-red, and one of the only non-Dodge-branded car in the brand’s Mexican lineup [the Hyundai Atos and H100 “Ram Van” are also badged with the Korean brand’s “H.”

After Argentina and Brazil some weekends ago, our whirlwind tour around the globe takes us back to the American continent this weekend, further up north, on a visit to Mexico.

Now if Mexican cars don’t excite you as much as a plate of nachos, that’s ok! There are 153 other países to explore in my blog. You will enjoy it mucho mucho, te lo prometo!