Mexico has been rapidly developing as the best place for car manufactures in North America. The country has become the main powerhouse for the automotive production, accounting for nearly a third of the growth in the entire industry since 1994. Mexico is without a doubt the new king of the automotive industry.
There are several reasons for all this growth in automotive in Mexico. The most obvious is the difference in price between other North American countries. Workers in Mexico are do not have notoriously high labor fees like the equivalent workers in America who make an average of forty dollars per hour. This cuts down on one of the biggest costs of manufacturing vehicles and saves massive amounts of money. Companies such as Honda have also chosen to start several factories in Mexico due to the reduced tax rates present in the country. This is good news for both America and Mexico, as Americans will have access to cheaper vehicles and Mexicans will have many more jobs available.
Many foreign car manufactures have also found great benefits in moving their factories to Mexico automotive locations. The main reason for this is because of the excessive cost to export vehicles to North America from countries like Japan and Germany. These manufactures have found Mexico to be the ideal location to make their automobiles and auto parts to start with as their main consumer, the United States, is just one border over.
As of last year, investment in automotive in Mexico reached upwards of $2.9 billion US dollars. This makes car manufacturing one of Mexico’s most profitable sources of income and in turn has become an essential part of the Mexican economy. While even the President of Mexico admitted that Mexican workers were paid far less than their American counterparts, the low cost has attracted more than enough factories to make up for it. The overall amount of jobs brought into Mexico by this boom in the automotive industry makes up for a very significant portion of the number of jobs in Mexico. It is safe to assume that the country’s unemployment rate would skyrocket if the car manufactures decided to take their business elsewhere.
However, the Mexican automotive industry won’t be leaving any time soon. Mexico has seen an annual increase in car manufacturing of 12%, while Canada and the United States have only seen decreases. The more many car manufactures that are sure to join in on this gold rush will only prove to increase the country’s economy. If Mexico could keep up this momentum for another several years, we could soon see the country as the number one automotive manufacturer in the world.
Overall, it seems as though Mexico will turn out to be very strong competition for car manufacturers in Canada and the US. Mexico automotive companies already has a very good history behind it, and it looks as though history will continue to repeat itself. Especially as car manufactures are flocking to Mexico to cash in on the great investment opportunities.