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The Rise of the Mexican Automotive Sector

by User Not Found | Jun 30, 2015
Mexico’s automotive industry is mature, dynamic and growing rapidly. In 2014 the industry logged record production and is on the same trend half way through 2015. Mexico is expected to manufacture up to 3.5 million lightweight vehicles in 2015 and up to 5 million by the end of the decade, according automotivemeetings.com. The U.S. and Canada bought four of every five of the 2.6 million cars exported from Mexico. The automotive sector accounts for six percent of GDP and 18 percent of manufacturing production in Mexico. But this is not one sided, the U.S. exports millions of dollars of materials each year to Mexico. According to the LA Times, in 2013 the U.S. had a $7 million surplus in plastics exporting. The Brookings Institution reported Kansas City is the second largest auto market based on trade with Canada and Mexico.

Ford currently produces four different vehicles in Mexico, but its operation recently expanded in April. The company is in the process of a $1.3 billion expansion on the engine factory in Chihuahua and will fund a $1.2 billion expansion on a new gearbox plant in Guanajuato. Guanajuato is the now the home to the largest number of car makers, with facilities for Honda, Mazda, Toyota, General Motors and Ford. Currently General Motor’s Buick LaCrosse engine is manufactured at its Mexico facility and shipped to Kansas City Fairfax plant via Kansas City Southern Railroad.

All of these Investments have helped Mexico rise and become the world’s seventh biggest producer, and fourth biggest exporters of cars, according to the Financial Times. Karl Bauer, an analyst for Kelly Blue Book, says the U.S. is losing opportunities to Mexico because of its consistency in cost and more trading routes. But, it is not a downfall for the Kansas City based rail company, KC Southern. Being the primary form of shipping for automotive industry, this increase in manufacturing will also give a boost to KC Southern. According to the Kansas City Business Journal, KC Southern is projected to grow 18 percent by 2018.

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