Mexican car industry in overdrive challenges rivals in US, China

The Mexican car industry is about to go on a US$10 billion factory building spree, illustrating the rising economic challenge the country poses to rivals from the United States to China.

Japanese and German carmakers are spearheading the drive, say parts suppliers and researchers, who expect more vehicle factories to be built south of the border than in the US between now and the end of the decade.

The US will consume the vast majority of the new cars, but Mexico’s domestic market has rebounded from a long slump, and in a sign of the country’s growing global role, its vehicle exports outside North America will rise faster than those to the United States.

BMW, Toyota Motor and Daimler’s Mercedes-Benz are expected to announce at least US$2 billion of deals in the next year or two, according to supplier and other industry sources.

That’s on top of nearly US$6 billion in announced plants by Nissan Motor, Honda Motor. Mazda Motor and Volkswagen.

US carmakers, all of which have been building cars in Mexico since before the second world war, will spend a further US$1 billion or more to upgrade their Mexican plants. And Nissan and VW are also considering expansions at existing factories that could total US$1 billion or more, according to sources familiar with their plans.