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Mazda and Toyota Mexican automotive manufacturing fortunes linked in Salamaca

Although the new Mazda plant in Salamanca, Guanajuato had already begun its Mexican automotive manufacturing activities, the company held the plant’s formal opening ceremony on February 27, 2014.

Mazda, a company whose health is greatly dependent upon its ability to export its products competitively, established this, its first North American plant, for the purpose of insulating itself from the unfavorable effects of changes in Dollar and Yen exchange rates, as well as with the goal of lowering its cost of labor and transportation. The company sees the initiation of production at the Salamanca plant as a way of ensuring its present and future viability in the competitive North American light vehicle market.

According to IHS Automotive Managing Director, Michael Robinet, not having made this move would eventually have made it difficult for Mazda “to be competitive in the U.S. market.”

Mexican automotive manufacturing activities taking place in the Salamanca, Guanajuato plant will be comprised of the Mexican automotive manufacturing of Mazda 2 and Mazda 3 models.

It is projected, at this point, that the number of units of these products assembled annually will top out at 180,000. Since plant capacity is two hundred and thirty thousand,  Another Japanese automaker, Toyota has contracted with Mazda for the manufacture of fifty-thousand vehicles  based upon the Mazda 2 platform at the new facility. This move will enable Toyota to increase its North American production capacity without adding to its fixed costs in Mexico.

Since 2011, the world’s major automakers have earmarked more than nine and one half billion dollars in investment for Mexican automotive manufacturing projects. This influx of capital has been led by Japanese firms such as the aforementioned as well as Honda and Nissan. The latter being the largest automaker in Mexico in terms of units produced and sales into the Mexican domestic automotive marketplace.

In addition to large financial commitments made by Asian automakers, other firms such as Ford, GM and Volkswagen have made moves that have expanded their presence in Mexico with an eye towards improving their competitive positions in North America. In addition to cost and proximity to market, Mexican automotive manufacturing activities also benefit as a result of the existence of a vast network of global free trade networks that have been pursued, and put in place, that give Mexican produced goods duty and tariff advantages in upwards of forty countries.

Read the primary source for this post at  Bloomberg.

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