“Audi coming to Mexico” is old news. The first foundation stone was laid almost two weeks ago, and with the fast inflow of investment in the automotive industry in this country, that is old news. By now the whole of Mexico is updated with the fact that Audi is setting up a plant in Puebla, the state that was invaded almost half a century ago by Audi’s parent company Volkswagen. It is clear that things are moving in this country, and even people with no interest in this industry will be aware of that.
With the construction of its Mexican plant, Audi is setting its first steps in the North American continent. Its two biggest competitors, Mercedes-Benz and BMW, have been here for over a decade already, but they chose the US as their manufacturing base. They are currently assembling their different SUV and Crossover models at these plants, which goes in line with the minds of the US inhabitant: Big, comfortable, and luxurious. Audi will be building the Q5 model at its Mexican plant, and eventually there would be space for a – still not existing – Q6 model according to Mexican CEO Rupert Stadler. Audi must be very confident about the country’s possibilities.
Although Audi is not the first luxury car brand that is setting up a manufacturing plant in Mexico, it does come with some risk. Mexican automotive suppliers and its labor force as such do not have that much experience with luxury car manufacturing. Lincoln and Cadillac have been here for quite some time, and also GM has been assembling some of their trucks and small SUV´s here, which have provided the Mexican workforce with some experience for sure, but it is still not comparable to the US and Europe for example. It shows that Audi is aware of this and thus preparing for it; the plant will contain a training center where employees will become familiar with the Audi quality standards and way of working. Besides, according to Stadler it does not matter where an Audi is built, each model will always be labeled with the “Made by Audi” seal of quality.
Moreover, for the Volkswagen Group this is not the first step towards luxury manufacturing in Mexico; since 2012 it is building the New Beetle at the Puebla plant. The New Beetle, apart from having undergone an entire make-over, is not much of the “People’s car’ the brand stands for, though it is meant for the customer to mark a ‘Style of Life” according to Andreas Hinrichs, Chairman of the Board of Volkswagen Mexico. In addition, Audi has experience with opening up in new countries that are not known as such for their qualitative manufacturing, like Hungary and China. This gives them full confidence in their new project. Audi also claims to have already received tons of job applications, even though the plant will not be opening until 2016, so they are self-assured to pick the most skilled people among the big group of applicants.
Audi is not the only relevant news in this period as also Mazda and Honda are building plants and VW has inaugurated an engine facility in the beginning of this year. These are all known and promising news for Mexico, but maybe even more interesting is what might be coming in the near future. Reuters published that Hyundai is looking at possibilities to enter Mexico, and luxury car brands BMW and Nissan’s Infinity are also considering this country for new plants.
A sure thing is that suppliers will be urged to boost their quality standards according to Audi’s if they want to have a chance of being contracted by the luxurious brand. The facility will be supplied by two supplier parks, one exclusively for Audi, while the other one will be serving the neighboring VW plant as well. With a projected production of 150,000 cars in the first years and with plans of doubling this figure, it is expected that suppliers will be in line knocking on the plant’s door begging for a spot in one of the parks. The quality of automotive suppliers in Mexico will therefore unquestionably escalate in a relatively short period, which is definitely achievable with the qualitative workforce Mexico’s engineering universities are producing. This increases opportunities for other luxury car brands in this country. Besides, quality will have to spill over to the surrounding infrastructure very soon in order to back up the production and quality. Because even though these cars ought to be strong and comfortable, which buyers would want to be forced to drive it down a road full of holes?
It looks like Mexico’s roads are being paved for more luxury car brands to join. Mexico and paved roads, it might sound like a dream, but it is rapidly becoming a fact.
The data on which this article is based comes from Autonews, Detroit news, Reuters, Bloomberg, Car Advice, Autoblog, Audi, BMW, and Mercedes-Benz.
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Mexico Automotive Review is the go-to resource for companies aspiring to participate in the development of the Mexican automotive industry. This annual publication presents the most comprehensive overview of the latest industry developments through a mix of articles, interviews, and technology spotlights. By analyzing the industry through the eyes of its key stakeholders, Mexico Automotive Review not only provides the most relevant overview of this strategic industry but also serves as an intelligent information platform that connects key players in the domestic and international automotive industry.