Global Observer

Nissan investment boosts Mexico sales, export potential

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MEXICO CITY -- Nissan makes a $2 billion bet on Mexico with a new plant that will produce vehicles for the national market and export.


MEXICO CITY -- Taxi driver Cesar Botello prefers Nissan. He's driven four different models in his career and points to the economical cost of repairs and the cars' longevity on tough terrain.

"The streets of Mexico City aren't like the streets in the U.S., which are smooth as a pool table," he said, while washing the grit off his 2004 Sentra.

Nissan broke ground last month on its third factory Mexico, a $2 billion investment that further cements the Japanese automaker's position as Mexico's top brand. It's also a bet on Mexico's muscle as an auto export hub.

Auto sales totaled 906,000 in 2011 in Mexico, according to the Mexican Automotive Industry Association (AMIA). Sales of light vehicles are up 28 percent versus the low point of 2009, when the global recession hurt internal demand, but are still 11 percent below peak 2008 levels.

Nissan – which captures the top market share of any automaker at 25.5 percent – builds five of the best-selling 10 models in Mexico. General Motors and Volkswagen tie for second with two top automotive models each in Mexico.

The company's newest plant will produce 175,000 units annually once it becomes operational at the end of 2013. The new plant, located in Aguascalientes, is expected to employ 3,000 workers and generate an additional 9,000 jobs indirectly.

Nationwide, Nissan currently builds more than 600,000 units and envisions boosting production to more than 1 million – most of which are destined for export. The company shipped 408,488 automobiles last year, falling behind Volkswagen, General Motors and Ford.

Nissan's investment is poised to bolster Mexico's auto production but the country will still fall short of its nearest rival, Brazil. In 2011, Mexico produced nearly 2.7 million units, making the country's the world’s 8th largest automotive producer, according to the International Organization of Motor Vehicle Manufacturers. Brazil, at No. 7, where Nissan is also investing this year, churned out 3.4 million units.

The U.S. produced nearly 8.7 million vehicles in 2011. All three countries pale against China’s production of more than 18.4 million units.

But Mexico is making a name in exports. In June, the country sped past the United States to claim the spot as fourth-largest auto exporter in the world.

Photo: Flickr/Marvin Kuo

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Lauren Villagran

Correspondent (Mexico City)

Lauren Villagran has written for the Associated Press, Dallas Morning News and Christian Science Monitor. She holds a degree from the Medill School of Journalism at Northwestern University. Follow her on Twitter. Disclosure