In just the past two years, more automakers are expanding to Mexico to take advantage of the reduced manufacturing costs and high-quality labor. Companies like Nissan, General Motors, Chrysler, Daimler Trucks and Fiat have already offshored their manufacturing process to Mexico, resulting in the country being the center of the recent auto-making boom. With auto companies clustering in Mexico, specifically in Saltillo, Coahuila, more industries are set to offshore manufacturing to the country.
Auto sales peak from Mexico offshoring
According to Bloomberg Businessweek, auto manufacturing is one of Mexico's top specialties, as the country is home to the fabrication process for 89 of the world's top 100 auto part makers. Due to the large number of automakers offshoring their production to the country, manufacturing has become a major component of Mexico's economy and labor force, making it the go-to destination for many companies.
The Washington Post reported corporations have been able to increase their production cycles by centering processes in Mexico, resulting in a significant boost in North American auto manufacturing. Mexico auto workers are not only able to match the productivity and skill levels of American employees, but do so for lower wages than their U.S. counterparts. For a fraction of the cost, Ford, GM and Chrysler, often called the Big Three automakers, have been able to see higher sales thanks to Mexico's fast production process.
According to Fox Business, Audi executives have already started plans to move the company's assembly process to Mexico by mid-2016. The company recently announced a $1.3 billion plant proposal for a new factory centered in central Mexico.
Rupert Stadler, chairman for Audi, told auto industry leaders and Mexican officials that the company chose the country due to its central position in the Western hemisphere and the auto industry prevalence in the area, according to Fox Business.
"Mexico was chosen very deliberately," Stadler said. "It is situated between North and South America, making it a linchpin between the two regions."
In 2012, Nissan invested approximately $2 billion in constructing a new plant in Mexico, Manufacturing Net reported. The plant is projected to produce nearly 175,000 vehicles annually. With nearly 1 million Nissan cars made throughout Mexico, the company holds a strong percentage of the auto market in the country. Due to more than 600,000 Nissan vehicles fabricated in the country in 2011, the company was able to hold a 7 percent of the hemisphere's auto industry market shares.