A new automotive assembly and manufacturing plant in Mexico will be built by the Chinese firm BAIC Group
BAIC, the Beijing Automotive Industry Company, intends to initiate a manufacturing plant in Mexico shortly in order to avoid paying the twenty-one percent duty that is charged on product that is imported by Mexico at present.
The leadership of the Chinese company BAIC are is to make a public announcement regarding a future capital investment of at least US $2 billion in the construction of its first manufacturing plant in Mexico.
Presently, the company pays twenty-one percent in import taxes on the value of the contents of containers that it uses to ship pre-assembled modules. These modules are shipped to a facility in Veracruz at which final assembly of the vehicles is done. By setting up a full manufacturing plant in Mexico, the company will be able to sell its products in Mexico and in South America at a more competitive cost to the consumer.
The eight possible locations for the BAIC manufacturing plant in Mexico are Puebla, Sonora, Coahuila, Nuevo Leon, Quintana Roo, Hidalgo, Guanajuato, and Yucatan. Which entity has success in attracting the investment will have to do with several factors. Among them is local access to suppliers, logistics convenience, and incentives offered by the corresponding state governments.
With the construction of the new manufacturing plant in Mexico, BAIC will integrate all of the several production processes of a car. This includes welding, painting, assembling and stamping. BAIC began marketing and selling its automobiles in Mexico in mid-2016 and has sold more than seventeen thousand units to date. Currently, BAIC International, which is a BAIC Group company is asking that Mexico’s federal government exempt the firm from import duties for the time during which it is building its manufacturing plant in Mexico.
According to company spokesmen, the leadership of the Beijing Automotive Industry Company is presently putting the finishing touches on plans for its new Mexican production facility. Details about the plant and its capacity should become available by the end of the month of May.
BAIC Group is an enterprise that is owned by the Chinese government and is the holding company of several automotive and machine manufacturers located in the capitol city of Beijing. Subsidiaries of the BAIC Group include BAW; a truck, bus and agricultural equipment maker, Foton Motor; and BAIC Motor; a military vehicle and SUV manufacturer. Additionally, BAIC also produced Hyundai and Mercedes branded vehicles for sale in the Chinese market through Beijing Benz and Beijing Hyundai. BAIC is the 4th or 5th leading domestic automaker in China.
The building of the new manufacturing plant in Mexico will serve to strengthen the country’s global position as a leading producer of light vehicles. Mexico is the world’s eighth most prolific automobile manufacturer and is 4th globally in terms of product shipped overseas. Only Japan, Germany, and South Korea export more cars outside of their national boundaries. When it opens its first manufacturing plant in Mexico, the Beijing Automotive Industry Company will be joining other manufacturers such as Ford, GM, Fiat Chrysler, Toyota, Mazda, Honda, Nissan, Hyundai, Audi, Volkswagen others in having a location in the world’s most rapidly growing automotive manufacturing market.
With the growth in the presence of major automotive OEMs in the country, opportunities for suppliers to locate a manufacturing plant in Mexico abound. These manufacturers are invited to learn how the Tecma Group can help them to initiate and maintain a manufacturing presence in Mexico at greatly reduced risk and cost.