Auto manufacturers in Mexico currently in production witness Hyundai’s arrival on the scene.

Hyundai will move some small-car manufacturing from South Korea to Mexico to join other auto manufacturers in Mexico in capitalizing on the country’s lower labor cost and closer proximity to lucrative vehicle sales markets in North and South America.

Mexican Automotive Industry Growing

More than $24 billion in new investment has come to Mexico in just the last five years, cementing the country as one of the fastest growing manufacturers of automobiles in the world. The country now produces many models for the world’s leading auto manufacturers in Mexico. In light vehicles alone, Mexico boasts eighteen production facilities in eleven Mexican states. In addition to Hyundai’s soon arrival in Mexico, many other leading automotive companies are currently manufacturing in Mexico, including among others:

  • General Motors
  • Chrysler
  • BMW
  • Volvo
  • Mercedes-Benz
  • Daimler
  • Ford
  • Mazda

Hyundai Shifting From South Korea

Last week, Reuters confirmed reports that Hyundai is planning on manufacturing their next-generation Hyundai Verna – the new version of the Accent small car – in Mexico, rather than South Korea. Beginning in 2017, the automaker has announced it will join other auto manufacturers in Mexico by assembling the vehicle in a plant owned by Kia, Hyundai’s sister company. The plant will most likely also manufacture Kia’s Rio small car.

The move makes sense, as it will significantly lower labor costs for producing the car and offers close proximity to the North American and South American markets. Production in South Korea, where demand for compact sedans has cooled off in recent years, is expected to be reduced by about half. The target for the new Mexican venture is 20,000 units per annum, and then 76,000 units in 2018 and 100,000 units in 2019.

“As labor costs in Mexico are just one fifth of that in Korea, Hyundai will be able to save a lot in small car production and better compete with rivals which have manufacturing presence in Mexico.”

-Ko Tae-bong, auto analyst at Hi Investment & Securities

According to recent reports of the next generation Hyundai Verna being seen testing in China, the vehicle will feature a fully revised exterior influenced by the Fluidic Sculpture v2.0 design language. Additionally, the interior has been noticeably revamped. It will reportedly retain the same engine with minor improvements and could employ the turbocharged Kappa engine. The vehicle will also replace the 4-speed and the 6-speed conventional AT systems with two options: manual transmission or the new 7-speed Dual Clutch Transmission (automatic).