- 2016 Elections
- Special Reports
- Maps & Data
- Dear Abby
- Games & Puzzles
- Events & Exhibits
- Food & Drink
- Arts & Music
- Movies & TV
Celaya, Mexico - Mexico is on track to overtake Japan and Canada and become the United States' No. 1 source of imported cars by the end of next year, part of a national manufacturing boom that has turned the auto industry into a bigger source of dollars than money sent home by migrants.
The multibillion-dollar wave of new factories is raising hopes that the North American Free Trade Agreement is fulfilling its promise of fueling growth and diminishing poverty south of the border, and it has turned a handful of central Mexican cities into bright spots of prosperity.
But critics note that a major attraction for car manufacturers are Mexico's low and stagnant wages, which have helped kept the poverty rate between 40 and 50 percent since the passage of NAFTA two decades ago.
An $800 million Honda plant opening Friday in the central state of Guanajuato will produce about 200,000 Fit hatchbacks 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."
Mexican President Enrique Pena Nieto plans to attend the opening of the plant in the town of Celaya along with the economy minister and top Honda executives.
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.
Manufacturing in Mexico is now cheaper than in many places in China, though the vast majority of the cars and trucks made in North America are still produced in the U.S. for domestic consumption and export to other countries. And many of the vehicles built in Mexico are assembled with parts that are produced in the United States and Canada and cross the border without tariffs under NAFTA.