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Mexico’s 2012 auto investments seen at $6B

Keywords: Tags  Mexican auto industry, automotive, ProMéxico, Luis Olivé Hawley, Nissan, General Motors, Volkswagen, Honda Fiat

MEXICO CITY — Mexico’s auto industry will end 2012 with an internal investment of about $6 billion, double the year-ago level.

Nearly half of that amount, or $2.97 billion, has been allocated to 23 automotive projects from Asian companies, according to Luis Olivé Hawley, head of government agency ProMéxico’s unit for promoting international investment and business.

Last year, companies from South Korea, Japan, China and India carried out 12 automotive projects in Mexico with a total investment of $1.93 billion. The Organization for Economic Cooperation and Development has ranked Mexico in global automotive manufacturing, which is why Asian investments are returning to the country, he told AMM sister publication Steel First.

About 80 percent of Mexican manufacturing is of high specification, Olivé Hawley said. And Asian countries have noticed, although Japan is a different case, he added.

"With the overvalued yen, Japan is looking for a place with better costs, but with equal or better quality," Olivé Hawley said.

The proximity of the U.S. market is also a major reason for the boost in Asian investment.

"China is returning to Mexico with many (new) projects or is complementing those made to supply the U.S. market," he said.

China is searching for new niches where international markets are growing.

"To conquer these niches, especially in more complex markets such as North America, the Chinese automakers will have to implement strategies to increase their competitiveness in cost, quality and design," Olivé Hawley said.

However, Mexico won’t benefit from Asian investments exclusively.

By the end of 2012, the country will also receive investments in automotive projects from Europe and the United States.

"New investments in the automotive industry will benefit from logistics infrastructure, roads and railway expansion," Olivé Hawley said.

ProMéxico data indicates that car manufacturers have invested $10.78 billion in Mexico’s automobile industry since 2007.

The major investors have been Japan’s Nissan Motor Co. Ltd.; Detroit-based General Motors Co.; Germany’s Volkswagen AG; Dearborn, Mich.-based Ford Motor Co.; Japan’s Honda Motor Co. Ltd.; Italy’s Fiat SpA; Japan’s Mazda Motor Corp; and Germany’s Daimler AG.

A version of this article was first published by AMM sister publication Steel First.

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