News, Insights and Best Practices for Manufacturing in Mexico

Mexico on its way to beating Japan

03 Feb 2014

Category: Automotive Manufacturing

Mexico is on its way to outpacing Japan as the No. 2 importer of cars to the U.S., according to Auto News. The lower tariffs that have come from the North American Free Trade Agreement are making it cheaper to ship from Mexico versus putting cars on a boat and moving them from Asia. In fact, exports from Mexico to the U.S. have more than quadrupled since 1993.

Consultant IHS Automotive estimates that Mexico will send $1.9 million worth of cars a year by 2015, which will make it No.2, above Canada, as the biggest car exporter to the U.S.

"It's certainly a low-cost place to produce and there's a lot of comfort with the caliber of the workforce in Mexico," said Ron Harbour, a manufacturing analyst and partner at consultant Oliver Wyman in a statement to Auto News. "In the late 80s and early 90s, what was coming in from Japan was overwhelming compared with what we thought about from Mexico back then. Obviously, things have changed."

In 2008, Japan shipped nearly twice as many cars to the U.S. as Mexico, but with the aid of three new plant openings (from Nissan, Honda and Mazda), along with all of the additional manufacturing growth that has been happening, Japan will be overtaken in 2014, according to the article.

Guido Vildozo, an HIS analyst estimates that cars made in Mexico and shipped across the border will reach $1.69 million, according to Bloomberg News, which is more than the $1.51 million that Japan ships out. Additionally, he estimates that Mexico will beat Canada's current No. 1 ranking of $1.87 million by 2015 when it potentially reaches $1.9 million.

"Passing Japan as a U.S. supplier has been in the works for quite some time, particularly since the Mexican plant announcements a few years back," Vildozo said in an interview.

"It looks like there's a possibility Mexico may pass Canada next year."

A good way of expanding to Mexico and gaining the benefits of easy transportation and inexpensive skilled labor is through a Mexico shelter company. Such a company helps clients establish a basis in Mexico, so the clients can do what they are used to doing, and the shelter will do the hard part.

The Offshore Group: You Manufacture ... We Do The Rest

Related posts