GM: More Mula For Mexico

mexico flag

U.S. automaker General Motors (NYSE:GM) is headed South and expanding out. It has announced its plans to invest $691 million in its Mexican operations this year, where it will begin production of a new factory in the region while also making upgrades to an existing one.

As the eighth largest producer of vehicles in the world, Mexico is becoming more and more attractive to automakers who recognize the country’s economic potential with its capable work force, availability of free trade agreements, and ideal location. GM has been in operation in Mexico for 78 years, and now, it hopes to not only upgrade its factory in San Luis Potosi (as it gets ready to make next-generation transmissions), but also construct an additional new one in Silao in central Mexico that will build 8-speed transmission. This new development  will hopefully help boost  the Mexican economy as the factories offer more employment opportunity. GM currently employs 15,000 people in its headquarters in Mexico City.

And this isn’t the first time the U.S. automaker has announced major spending in the country. In July 2011, GM committed to investing $900 million in Mexico, while in the same month the following year, the company promised with $420 million. Both sets at money were purposed to develop its San Luis Potosi and Silao plants.

Now, once again, GM is showing its commitment to the country it currently has the second largest output in by pledging to invest another $691 million, $211 million of which the automaker will spend on the expansion of its Toluca plant, $349 million which will go to its new factory in Silao, and $131 million which will be spent on more expansion of its San Luis Potosi plant. In all, $480 million of the 691 will subsidize GM’s next-generation transmission plans — plans that the automaker has thus far been very tight-lipped about.

In terms of output in Mexico, GM is second only to Nissan Motor Co whose senior vice president of marketing and sales for Nissan sales in North America, Jose Munoz, recently made a dynamic push in the region and led the company’s Mexican subsidiary into market dominance. Its Tsuru II model is especially popular in Mexico for being strong, fast, affordable, and reliable. But now, Nissan is focusing more of its efforts in the US where it’s hoping to increase it market share — a goal that the company has yet to ever realize.

So it appears then, that as U.S. automaker sets its sights on the South, its competition is setting its sights on the North, which could end up paying off for the Detroit-based automaker. GM already produces many of its big name vehicles in Mexico including its Chevrolet Silverado, GMC Sierra pickup trucks, Chevy Sonic and Captiva, Cadillac SRX vehicles, and Chevy Aveo, Trax, and Tracker vehicles.

Don’t Miss: Sales of Chevy’s Spark Are on Fire.

More from The Cheat Sheet