Compact cars put Mexico in pole position

VW is happily committed to Mexico

By Graeme Stewart

The growing demand in the USA for compact cars has placed Mexico in pole position as the production location of choice for Volkswagen.
Thomas KarigThat was said by Thomas Karig, Corporate Relations and Strategy Vice President of Volkswagen de Mexico, as he spoke with MEXICONOW.
Speaking on Volkswagen in Mexico, and looking back to over 50 years of the company’s presence in the Republic, Mr. Karig said other factors that have led to VW Mexico consolidating its presence in the country included Free Trade agreements, which were a major competitive advantage in providing access to global markets, and the fact that Mexico offers competitive production costs and a solid automotive supply base.
He said: “Add to that the growing demand for compact cars in the U.S. which positions Mexico as the production location of choice, the fact European and Japanese manufacturers choose Mexico to supply the North American markets and compensate exchange rate variations, that transport infrastructure has been significantly improved in the past 10 years and that the education and training offered is expanding and being adapted to industry requirements, then you can see why VW is committed to Mexico.”
His comments came as it was revealed that 69% of German firms in Mexico plan to invest in the country in 2015, following the trends of economic development, according to a document of the Mexican-German Chamber of Commerce and Industry (CAMEXA).
Johannes Hauser, CAMEXA-CEO, said that the positive expectations of the partners already established in the country encourage more German companies to analyze the potential of the country for the marketing and manufacture of its products.
He said that the study clearly showed that trend during 2014 due to the boom in the automotive industry as well as the opportunities that have come from the energy reform in the oil and gas sector in Mexico.
Mr. Karig underlined VW’s commitment to Mexico when he said: “There can be no doubt of our commitment to our Mexico locations as up to 2018, our Group will invest US$7 billion in North America, most of it in Mexico.”
Volkswagen Mexico has a total of 266 suppliers of auto parts located primarily in the States of Guanajuato and Puebla, as well as in Mexico City.
He said: “We are very pleased with the base established by our providers. Working with these companies means we comply with the rules of origin established in several trade agreements.”
He stressed that Mexico had become a competitive country for the global automotive industry, mainly because it had a base of Tier 1 suppliers.

The Silao plant in Guanajuato State produces 500,000 engines per year and Mr. Karig explained: “As car production by Volkswagen in North America grows, these plants will require increased production of engines in the region.”

Mr. Karig said that the model of dual education in Guanajuato would allow VW to meet the requirements of highly skilled technicians in the automotive sector.

He said: “We need specialized personnel in automobile production and processes, not only at the level of engineers but also at the technical level.”

“The industry and its suppliers require well prepared staff and we encourage initiatives such as the model of dual education, which started in Guanajuato and spread to other States in Mexico. This model of preparation and training of personnel is one of the pillars of the success of German companies at international level and in the case of Guanajuato, Volkswagen maintains its support for the initiative.”

He explained that VW decided to install the engine plant in Guanajuato as a means of diversifying the company’s operations. He said a second phase in the factory in the Guanajuato Interior Port was already built and ready.

Mr. Karig reviewed VW de Mexico’s achievements over the past 50 years from its beginning in Puebla in 1964 to starting production on the new Golf in 2014.
He said: “Production started in 1967 in Puebla and in 1973 the Safari became the first car exported from Mexico. In 1977, we began production of the first Golf for Mexico and the first Beetle was exported to Europe.”
“1988 saw the Golf and Jetta exported to the U.S. and Canada and in 1993 we reached the mark of 100,000 beetles sold in Mexico. In 1996, the new Beetle was exported from Mexico to the world.”
“In 2013, Audi chose Puebla as its new plant and in that same year we celebrated 10 million VW cars produced in Mexico. In 2014, production started on the new Gulf and we celebrated 50 years in Mexico.”
“Over 80% of our production is exported worldwide, mainly to the US and Canada.”
Mr. Karig said that VW was conscious of its close ties to the Puebla and Silao communities and he was pleased that VW’s” THINK BLUE” environmental program had been a success.
He said: “THINK BLUE includes water management, energy efficiency and waste management projects and we also support nature and bio-diversity protection in Mexico, as well as a reforestation program.”
“Add to that ECO CHAVOS, our youth for nature protection program introduced in Puebla, and we have a well-rounded environmental protection program.”