Mexico automotive industry

By Katy Watson BBC Mexico and Central America reporter

Before we start, I must admit your own interest. I have spent the past few months trying to get an automobile within Mexico, talking to automobile dealers and buddies about the most readily useful proposes to be had.

It is never ever simple navigating this sort of part of an international nation.

But my research has proved fruitful. Not merely have I been able to get some wheels, in doing this I have learned anything or two about one of Mexico's most effective companies - the one that specialists state brings in much more forex for Mexico than its oil.

Value for money

I took a journey to Nissan's manufacturing site in Aguascalientes, one hour from Mexico City. Greeted by hugely pleased staff members in organization coats and baseball limits, I happened to be bombarded with data in regards to the company's success.

One in four automobiles made in Mexico is a Nissan. And another car is manufactured every 38 moments at the flowers in Aguascalientes. Evidently Nissan is enjoying a trip right now.

Nissan Mexicana's vice-president of production, Armando Avila, states Mexico is market that makes good sense geographically. Aided by the earth's biggest automobile marketplace toward north and all sorts of of south usa below Mexico, it provides the company mobility, he says.

But also geography, Mexico has actually a reputation for a value-for-money staff.

Based on the US-based Center for Automotive Research (Car), wages can be as little as an eighth of what they are in america. So is that exactly what pushes car brands to transfer?

Eduardo Solis, the guy in charge of Mexico's Automotive business Association, doesn't think so.

"If these investments just stumbled on Mexico for cheap labour, then we'd have observed important assets in Guatemala, Honduras, El Salvador, Costa Rica and Nicaragua, " he tells me. "Not one of those countries get one single automaker these days."

Mexico automobile business in figures

• In the 1st half of 2014, Mexico produced about 1.6 million cars, up 7.4% for a passing fancy period a-year earlier in the day
• One out of four vehicles made in Mexico is a Nissan
• Significantly more than 80per cent of vehicles produced are shipped
• Foreign automobile manufacturers, including Toyota, Ford, BMW and Audi have actually announced multi-million dollar opportunities in the united states
• There are about 22 million second-hand automobiles in Mexico, mostly brought in from the United States

Billion-dollar investments

Mexico has done well at training its workforce - not merely in handbook labour, engineers graduating from Mexican universities may highly trained.

In accordance with Luis Lozano, just who heads the automotive team at PwC, investment in recruiting while the trade agreements with over 40 countries have helped Mexico immensely.

The figures speak on their own. Vehicle states that thus far this present year, $5.5bn (£3.5bn) of opportunities being launched, including from . That, states vehicle, is higher than the investments produced in the US.

But it is not merely the mass-market car makers who are creating their particular organizations right here.

Audi will likely to be moving producing its Q5 SUV from its head office in Germany to its plant in Mexico - a move so it says is possible because of the free trade agreements being offered here.

Low demand home

But as it is so often the outcome, there clearly was a disadvantage to all of this success. Amid the rising production numbers - a grew by 10% a year ago - interest in vehicles within Mexico is finding it tough to go up a gear.

Fewer than one out of five cars produced in Mexico is sold in Mexico. The rest are shipped. Actually, within Nissan plant we went to, 90percent of this cars were being provided for the usa. One other 10percent to Brazil.

Analyst Armando Soto, of Kaso & Associates, says the demographics describe why.

"in the event that you look at spending energy, over 50per cent regarding the populace battle to buy a unique vehicle when they do not have a satisfactory way to obtain financing, " he claims. "But there's another issue - we now have a large part of the labour force which works within the casual economy, and additionally they can not access financing often."