MEXICO CITY (Nov. 27, 2007) — A Mexican business conglomerate plans to import cars from China next year—and then build cars in Mexico with a Chinese partner by 2010.
Salinas Group, a Mexican financial services, communications and retailing giant, said it will start producing Chinese-designed automobiles at an assembly plant to be built in western Mexico in collaboration with China's First Automobile Works Group (FAW). Salinas held a ground-breaking for the plant Nov. 23 with Mexican President Felipe Calderon laying the cornerstone.
Salinas unit Grupo Elektra will own a majority stake in the plant, which is expected to cost about $150 million, take three years to build and have an initial production capacity of 100,000 vehicles annually, Salinas spokesman Daniel McCosh said.
The vehicles will be sold in Mexico and exported to Central America, according to a bulletin posted on the Salinas Web site.
According to the bulletin, Salinas—which caters to the austere end of the Mexican retail sector and already imports Chinese motorbikes—also plans to start selling FAW-badged vehicles in Mexico in the first quarter of 2008.
FAW already has partnerships with Volkswagen/Audi, Toyota and Mazda, Salinas said.
Under Mexican law, any foreign company wishing to retail cars or trucks in Mexico must have a viable vehicle assembly operation in the country or prove its intention to build one by laying the plant's cornerstone.
The FAW assembly plant site is in Zinapecuaro, which is north of Michoacan's state capital Morelia and lies between Guadalajara and Mexico City, Mr. McCosh said.
“FAW will be the first Chinese auto maker entering into the fast-growing Mexican automobile market,” FAW said in a statement released after the Salinas announcement.
Once the factory is completed, the Chinese-Mexican joint venture “will produce Tianjin FAW Xiali Automobile Division´s economical cars named Xiali and Vita, which will be sold to the Mexican market,” FAW said.
No other details were available about the vehicles. Mr. McCosh said a four-door subcompact sedan was visible in the pictures he was receiving from the official ceremony.
Salinas said the vehicles would be 5-10 percent cheaper than the average car sold in Mexico.
Mr. Calderon, in a speech at the ceremony, said the assembly plant would employ 4,000 and another 12,000 or 15,000 would be contracted by suppliers, transportation companies and others.
“We are committed to turning Mexico into a real powerhouse in the automotive industry,” Mr. Calderon said, adding, “especially now that many companies in other developed countries, especially in the U.S., can no longer sustain, among other things, the high cost of production and union demands.
“We're determined to bring to Mexico all the automotive companies we can, from the makers of screws to those of tractor trailers. We want them to come to Mexico because it means jobs for Mexicans and a better life for all.”
He said the new plant in Michoacan was ideally situated between Mexico's Pacific port of Lazaro Cardenas and the Gulf port of Veracruz, both of which were only a few hours' drive away.
When the assembly plant comes on stream in 2010, Salinas Group will analyze the feasibility of increasing the plant's production capacity, according to its Web site.
Ricardo Salinas heads the Salinas Group. The group's holdings include: Banco Azteca, which operates in Mexico, Panama, Guatemala, Honduras, El Salvador and Brazil; an insurance company called Seguros Elektra; a pensions plan called Afore Azteca; Mexico´s second-largest TV company, TV Azteca; mobile telephone company Lusacell; and a nationwide chain of appliance stores called Elektra.
According to the Salinas Web site, the conglomerate posts annual sales of $5 billion and earnings before interest, taxes, depreciation and amortization of $1.1 billion annually.