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GLOBAL: "Steel Sector Outlook: Expectations for the industry in today's economic context" 2010 repor

GLOBAL: "Steel Sector Outlook: Expectations for the industry in today's economic context" 2010 report. 12-page report by KPMG International.

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back to index backGLOBALtalk February,  2017


The move to assemble vehicles in Mexico is about more than low wages

Total per Vehicle Cost Advantages of Producing a Vehicle in Mexico for U.S. or European Markets.

Mexican automotive production has been a topic of recent debate. Since 2009, automakers—including BMW, Honda, Hyundai-Kia, Mazda, Nissan, Toyota, and VW/Audi—have announced eight new assembly plants investments in Mexico totaling $9 billion. What is missing from the conversation is that Mexico’s low labor costs may no longer be the prime driver of these investments; Mexico’s free trade agreements allow manufacturers to reach customers in countries representing 60 percent of the world’s GDP tariff-free.

CAR researchers estimate that making a vehicle in Mexico results in $600 to $700 lower labor costs per car than if the same vehicle were made in the United States.

Some of the benefit of lower labor costs in Mexico is offset by the higher worker attrition rates than found in U.S. assembly plants. However, labor cost savings only account for about half of the cost savings for vehicles that are then sold in the United States, and less than 15 percent of the total cost advantage for vehicles that are exported from Mexico to Europe for sale.

This comparison shows the cost savings for producing a $25,000 mid-size car in Mexico for sale in the United States, versus producing that same car in the United States.  It also shows the cost savings for producing the same mid-size car in Mexico for sale in Europe compared to producing it in United States to be sold in Europe.

To download 78-page report, please click here.

Source: CAR Group
- GAI





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