Volkswagen’s new Golf is already something of a hit with the reviewers. It could soon be a hit with the accountants too: Volkswagen announced that it will shift production of all next-generation Golfs sold in North and South America to a plant in Puebla, Mexico.
The move comes as little to no surprise: we reported on the possibility of Volkswagen’s MQB chassis/platform and the Golf moving to Mexico last fall. But it’s a good sign that the Golf–and cars that share its platform–have a bright future in the United States.
Volkswagen’s reasoning is much the same as any other manufacturer’s reason for erecting a plant somewhere within the NAFTA zone (Canada, the U.S., and Mexico): it makes business sense to make cars close to where people are buying cars. Volkswagen makes no secret that it is targeting North and South American markets to boost sales, perhaps to the point of outweighing poor figures in the European Union.
It helps that producing cars in Mexico is both cheaper and less susceptible to swings in currency exchange. Unstable currency markets mean that small cars like the Golf (which is made internationally) could be profitable one day and unprofitable the other. As David Zenlea found on his trip to one of VW’s Mexican plants, workers there earn in the neighborhood of $150 a week–and the Mexican peso and American dollar don’t fluctuate as much as, say, the Euro. The result is that a next-generation VW GTI (which combines a Golf body from Puebla and a 2.0-liter turbo I-4 from a nearby VW plant) could be either more consistently profitable for Volkswagen, a less expensive car to buy, or both.
What does this all mean? Well, between the addition of an MQB-platform model in Mexican production and the previously reported Silao, Mexico plant making 1.8-liter and 2.0-liter turbo four-cylinder engines, don’t be surprised when the VW group begins to push cars like the VW Golf and GTI and Audi A3 (a potential product for Audi’s upcoming San Jose Chiapa, Mexico plant) into the market in greater numbers, and perhaps even at lower costs. Only time will tell.