News Column

Investments in Mexico Pay Off for Auto Manufacturers

Dec. 16, 2012

Takashi Kitazume

Nissan

Japanese investments in Mexico remains steady, mainly in the auto and auto parts sectors, reflecting the growing vehicle production in the country and popularity of Japanese brand cars, said a researcher from the Japan External Trade Organization.

More than 400 Japanese firms operate in Mexico today, with 56 investment plans announced over the past two years. Most of these investments, including expansion of existing operations, were in the auto and auto parts production as well as related sectors, said Takao Nakahata, a researcher from the Latin American Division of the Japan External Trade Organization's Overseas Research Department.

Nakahata was speaking at a seminar organized by the Keizai Koho Cener on Nov. 20 to discuss the Mexican economy and recent trends in Japanese investments.

Vehicle production in Mexico has steadily increased over the past three decades to about 2.68 million units in 2011, with exports accounting for much of the increase. The output in 2011 rose 14 percent from the previous year, making the country the world's eighth-largest in terms of auto production.

Nissan Motor Co. has sharply increased its output in recent years to become the No. 1 car manufacturer in the country, followed by General Motors, Volkswagen, Ford and Chrysler. Japanese vehicles have become popular in the local market, with Nissan and other Japanese cars accounting for a combined market share of about 40 percent over the past two years, Nakahata said.

While production and exports continue to expand, domestic vehicle sales have not yet recovered from the slump following the global financial crisis, he pointed out. Domestic sales in 2011 were even lower than the level of a decade ago, as consumer spending remained sluggish, he said.

Still, Mexico remains the second-largest Latin American market after Brazil, he said. Its relatively young and growing population of 123 million has the potential of becoming a major consumer market, although the huge income gap between the rich and poor continues to weigh down consumer spending, he noted.

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Distributed by MCT Information Services



Source: (c) 2012 the Japan Times (Tokyo)


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