If Toyota establishes a full manufacturing plant in Mexico, it would be following in the footsteps of Audi (pictured), Kia, Honda, Daimler-Renault-Nissan Alliance and others who have all opened or announced Mexican factories. Japanese rival Nissan has been there since 1966

If Toyota establishes a full manufacturing plant in Mexico, it would be following in the footsteps of Audi (pictured), Kia, Honda, Daimler-Renault-Nissan Alliance and others who have all opened or announced Mexican factories. Japanese rival Nissan has been there since 1966

Toyota reportedly is looking to build a new vehicle plant in Mexico to take advantage of the country’s low labour costs and numerous free trade agreements.

Sources told Bloomberg News Toyota executives met this week with Mexican government officials for preliminary talks about building a plant in the country.

Toyota does have a small Tacoma pick-up factory near Tijuana that assembles vehicles from kits but is one of the only major carmakers currently without a full manufacturing facility in Mexico or with announced plans to do so. It also has a deal with Mazda to supply a variant of the Demio/2 on an OEM basis from a new plant opened last January.

Toyota said it was always evaluating opportunities in North America in line with market demand, but no decisions had been made

Mexico is described by analysts as the crossroads of the automotive trade in the Western hemisphere and a Toyota plant would add to investments in Mexico that the government says include US$10bn of factories announced or opened since December 2012. Vehicle output could reach a record 3.2m this year, according to the Mexican Automobile Industry Association.

Last month Kia announced plans for a US$1bn factory to produce 300,000 cars a year in Mexico and Daimler-Nissan said in June they planned a joint US$1.3bn plant to assemble up to 300,000 Mercedes-Benz and Infiniti compact cars.

Mexico could overtake Brazil this year as the number one producer of vehicles in Latin America according to IHS Automotive, fuelled by strong sales in North America combined with slowing demand in Brazil.

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