The automotive industry has seen a lot of changes over the last several decades, and one of the most significant changes is where cars are manufactured. Although automakers have had a manufacturing presence in Mexico going back to the 1960s and before, it’s only been within the last decade that Mexico has become a large-scale exporter on the order of Japan, Canada and Germany. According to Bloomberg, Mexico has surpassed Japan as the number-two exporter of cars to the U.S., just behind Canada.
In addition, trade agreements with 40 countries worldwide, as well as favorable trade terms with major markets such as Brazil, and a cost of labor 20 percent that of the U.S. have converged to make Mexico a major auto exporting nation. In addition to the Detroit three and Volkswagen, which have had operations in Mexico going back several decades, the Japanese automakers have recently made significant investments in the market, with the most recent examples being Mazda and Honda.
Mexico is also no longer just an exporter of small compacts. The Lincoln MKZ is made in Mexico, and Audi has started construction on a plant in San Jose Chiapas to be the worldwide source of the next-generation Q5 SUV. The passage of the North American Free Trade Agreement in the 1990s is credited with making Mexico a major export hub for the car industry.