CELAYA, Mexico (AP) — Mexico is on track to become the United States’ No. 1 source of imported cars by the end of next year, overtaking Japan and Canada in a manufacturing boom that’s turning the auto industry into a bigger source of dollars than money sent home by migrants.
The boom is raising hopes that Mexico can create enough new jobs to pull millions out of poverty as northbound migration slows sharply, but critics caution that most of the new car jobs are low-skill and pay too little. Mexico’s low and stagnant wages have helped kept the poverty rate between 40 and 50 percent since the passage of the North American Free Trade Agreement two decades ago.
An $800 million Honda plant that opened yesterday in the central state of Guanajuato will produce more than 200,000 Fit hatchbacks and compact sport-utility vehicles a year, helping push total Mexican car exports to the U.S. to 1.7 million in 2014, roughly 200,000 more than Japan, consulting firm IHS Automotive says. And with another big plant starting next week, Mexico is expected to surpass Canada for the top spot by the end of 2015.
“It’s a safe bet,” said Eduardo Solis, president of the Mexican Automotive Industry Association. “Mexico is now one of the major global players in car manufacturing.”
When NAFTA was signed two decades ago, Mexico produced 6 percent of the cars built in North America. It now provides 19 percent. Total Mexican car production has risen 39 percent from 2007, to nearly 3 million cars a year. The total value of Mexico’s car exports surged from $40 billion to $70.6 billion over that span.
“I congratulate Honda for its having confidence in Mexico, for having total confidence in the development of our country,” said Mexican President Enrique Pena Nieto, who attended the opening of the plant in the town of Celaya along with Honda CEO Takanobu Ito. “They’re contributing to two basic objectives, generating wealth and creating jobs in this country.”