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Analysis: Trump goes after the “jewel” of Mexico's economy

04/01/2017
15:31
Tláloc Puga
Mexico City
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Amid fears of protectionist Trump, EL UNIVERSAL analyzes key facts of Mexico's automotive industry, the seventh largest overall worldwide and fourth largest in exports.

Just a few days before being sworn in as the next president of the United States, Donald Trump has demonstrated that he can in fact impact Mexico's automotive and auto parts industry, the jewel in Mexico's manufacturing and exports.

The origins of Mexico's automotive industry date back nearly a century ago to 1921, when the first plant was built and opened in the country.

Since then, the industry has gone on to become one of the biggest in the world. For example, 3.6 million vehicles were manufactured in the country in 2015 alone, making it the seventh largest producer of automobiles worldwide. According to Mexico's Finance Ministry, it expects the country to become the fourth largest by 2020.

In addition, Mexico exported 2.8 million vehicles in 2015, making it the fourth largest automobiles exporter worldwide, and one of the largest recipients of foreign direct investment (FDI) by automotive manufacturing companies.

Between January and September of last year, Mexico received 3.622 billion dollars in FDI, 18% of Mexico's entire FDI for the year.

The country's automotive industry directly employed 826,250 people at October 2016, which represents 23% of Mexico's entire manufacturing workforce.

Over the last few decades, Mexico has attracted the world's key automotive companies due to its strategic geographic location, preferential access to new markets, a high-quality and competitive labor force, wide range of suppliers, and sustainable growth in the manufacturing of automobiles and auto parts.

The Mexican automotive industry generated over 30 billion dollars between January and September 2016, which is equivalent to 20% of the country's entire manufacturing output and 4% of Mexico's entire economy.

The industry sold 1,411,000 light vehicles between January and Novermber 2016, setting a record high for the country. Furthermore, automobile sales in the country increased by over 400% over the last two decades.

In September 2015, the Daimler AG entered into a partnership with Renault-Nissan to build a strategic plant in Mexico, for which they expect to invest a total 1.24 billion dollars.

Infiniti expects to start manufacturing its vehicles in the country this year and Mercedes-Benz by 2018.

In Just 2016, BMW began construction of its new manufacturing plant in San Luis Potosí, for which it expects to invest 1 billion dollars through its estimated completion date of 2019.

In September of last year, KIA Motors inaugurated its first plant in Mexico, for which it invested 3 billion dollars. The plant is located in the manufacturing powerhouse state of Nuevo Leon.

That same month, Audi also inaugurated its first plant in Mexico, for which it invested a total of 1.3 billion dollars.

Toyota also began construction of a new plant last year and expects to invest nearly 1 billion dollars in the country for this project.

Since Mexican President Enrique Peña Nieto was sworn into office four years ago, the Mexican automotive industry has successfully received 120 billion dollars in FDI for 10 new manufacturing plants and the expansion of two existing U.S.-owned auto parts plants. 

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