The dollar value of foreign direct investment in Mexico’s automotive industry from December 2012 to the present has exceeded US $20 billion.
On Wednesday April 15, 2015, a new Toyota Guanajuato investment was announced by company officials. The world’s largest automaker will direct US $1 billion into the construction of a new passenger car manufacturing facility in Mexico.
Although the company has an established assembly plant in Baja California for Tundra and Tacoma pickups, the new 2020 Corolla model release will be the first sedan it will manufacture in Mexico.
Production of the Corolla will be moved from its present location in Cambridge, Ontario. According to company officials the move of the Corolla to the site of the Toyota Guanajuato investment is a part of the company’s North American geographic strategy to build less expensive, lower margin and smaller cars, like the Corolla, in lower cost environments, such as Mexico, and to reserve production of more expensive, larger luxury and sport utility vehicles for Canada and the United States.
The new billion dollar Toyota Guanajuato investment will result in the from “the ground up construction” of a plant that will have the capacity to build 200,000 vehicles per year. Assembly lines are scheduled to begin to move in 2019. Toyota officials stated that the new facility will employ about 2000 Mexican workers, and that the decision to move production of the Corolla from the Cambridge, Ontario plant, in addition to issues related to its North American geographic strategy, was driven by Mexico’s growing prominence in the global auto industry, its favorable labor structure, its increasingly strong and diverse supplier base and its ability to serve as an export platform due to its unmatched network of global free trade agreements.
The Toyota Guanajuato investment marks the end of a three year expansion moratorium that the company had placed on the establishment of facilities to increase production capacity. With it the State of Guanajuato continues to attract foreign direct investment from both Japanese and non-Japanese automakers. Toyota will join Japanese automotive companies Mazda and Honda there, as well as European and US-based manufacturers Volkswagen and GM.