Mexico plans to keep measures to support its ailing auto industry in place at least until an expected recovery late next year as it hopes to attract more investment to the country, a senior trade official said on Friday.
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The government has been trying to lessen the pain by paying a third of workers’ salaries when companies suspend operations at factories, and that programme is expected to continue until business turns up, deputy secretary of international trade Beatriz Leycegui told Reuters in Tokyo.
Mexican auto production fell by a third year on year in March, mostly because about 70% of vehicles produced in Latin America’s second-largest economy go to the US market, which is suffering its worst downturn in almost 30 years.
General Motors temporarily shut a pick-up and sport utility vehicle plant in central Mexico this week due to weak demand from the US.
Reuters said Mexican auto parts makers axed 25,000 jobs last year and losses have continued this year – the country is now the top producer for the US.
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By GlobalData“We are paying particular attention to what is happening to Chrysler and General Motors,” Leycegui told the news agency. “Japanese companies are doing better.”
Leycegui noted that Japanese brands were benefiting from a shift in consumer tastes towards smaller cars and expected Japanese carmakers to play an increasingly role in Mexico’s auto industry.
“There has been an amazing growth by the Japanese companies in Mexico’s market,” she said.
Nissan Motor has been the most aggressive, producing nearly 450,000 vehicles in Mexico last year, nearly 10 times what Honda and Toyota each produce.
That helped Nissan take 21% of the 1m-a-year Mexican market, ranking it behind only GM. Honda and Toyota had a combined 11% share.
Leycegui told Reuters she was confident of attracting more investment from Japanese as well as Chinese automakers as they seek to gain a foothold in Latin America, including Mexico itself, the world’s 10th largest car market.
“We think that we have a very strategic location in order to be able to supply our goods to all of Latin America,” she said, noting that Mexico had seven free trade agreements with the region.
Leycegui said Mexican president Felipe Calderon had committed to investing more than US$40bn annually until 2012 on infrastructure including roads and port facilities that would present further investment opportunities for Japanese developers while making the country more attractive as a production base for manufacturers.
Despite the current crisis, Daimler opened a new truck plant in Mexico in February, switching some output from Canada and the United States.
Japan’s truck maker Isuzu Motors and tyre maker Bridgestone have announced in the past six months plans to establish or expand production facilities in Mexico.
