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Mexico Passes Japan as Second-Largest Auto Exporter to U.S.

Motor Trend logo Motor Trend 2/2/2014 Edward A. Sanchez
Vw Jetta Production At Puebla Mexico Plant© Provided by MotorTrend Vw Jetta Production At Puebla Mexico Plant

When people think of nations that are major auto exporters to the U.S., Japan, Germany and Korea are generally the first to come to mind. Yet when viewed from the standpoint of where the vehicles are actually built, today it's Canada, Mexico and Japan in third place. There are several factors that have made Mexico and attractive manufacturing base for automakers, according to Bloomberg. Chief among them is proximity to the United States, the second-largest auto market in the world, recently toppled off its podium by China.

In addition, trade agreements with 40 countries worldwide, as well as favorable trade terms with major markets such as Brazil, and a cost of labor 20 percent that of the U.S. have converged to make Mexico a major auto exporting nation. In addition to the Detroit three and Volkswagen, which have had operations in Mexico going back several decades, the Japanese automakers have recently made significant investments in the market, with the most recent examples being Mazda and Honda.

Mexico is also no longer just an exporter of small compacts. The Lincoln MKZ is made in Mexico, and Audi has started construction on a plant in San Jose Chiapas to be the worldwide source of the next-generation Q5 SUV. The passage of the North American Free Trade Agreement in the 1990s is credited with making Mexico a major export hub for the car industry.

Source: Bloomberg


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