Honda plant boosts Mexico's rank for auto exports
With the opening Friday of a Honda plant in the city of Celaya, Mexico, that country is taking another step toward becoming the largest car exporter to the United States.
Once the Japanese automaker's final assembly plant is up and running, Mexico will overtake Japan to become the No. 2 auto exporter to the U.S.
By the end of 2015, Mexico is expected to pass Canada and ship more vehicles into the U.S. than any other country.
"Our new plant in Mexico is based on the Honda company principle of maintaining a global viewpoint to supply products of the highest quality, yet at a reasonable price, for worldwide customer satisfaction," said Takanobu Ito, president and CEO of Honda.
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The facility, which will produce about 200,000 Fit hatchbacks a year, is Mexico's 13th full-size auto assembly plant. By comparison, there are 44 final assembly plants in the U.S.
"Mexico is the place to be in North America if you're an automaker," said Thomas Klier, an economist with the Federal Reserve Bank of Chicago who specializes in the auto industry.
A number of factors are behind the trend.
First, the country's location and many trade agreements make it the optimal place for many automakers to build and ship vehicles, according to experts.
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"Mexico has the best passport in the world for auto manufacturing," said Joe Langley at IHS Automotive. "It has free trade agreements with all the key countries around the world, and it's in the backyard of the second-largest auto market in the world."
Klier agreed about the geographic advantage.
"Mexico is almost like a hub for the automakers," he said. "They have the U.S. and Canada to the North. They can supply South America and even countries in Europe."
It also helps that Mexican autoworkers make about a fifth of what those in the U.S. and Canada are paid. And as more makers establish or expand operations in Mexico, its skilled labor pool is growing.
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Those openings will begin the next wave of expansion, according to the experts.
"This is just the tip of the iceberg for Mexican auto production," Langley said. "I expect we'll hear a couple more announcements within the next year."
Hyundai is the most likely candidate to head south of the border, as its U.S. plants are close to capacity. And don't be surprised if Mercedes-Benz and BMW follow Audi's lead to build more luxury vehicles in Mexico.
Questions? Comments? BehindTheWheel@cnbc.com.