Mexico To Trump Japan As No. 2 Car Exporter To U.S.

Mexico is on track to replace the Asian automotive giant, Japan, as the second-largest exporter of cars to the United States by the end of the year. An $800 million Honda plant opening Friday in the central state of Guanajuato will produce about 200,000 Fit hatchbacks a year, helping push total Mexican car exports to the U.S. to 1.7 million in 2014, roughly 200,000 more than Japan. And, with another big plant starting next week, Mexico is expected to surpass Canada for the top spot by the end of 2015. "It's a safe bet," said Eduardo Solis, president of the Mexican Automotive Industry Association. "Mexico is now one of the major global players in car manufacturing."

Experts say Mexico's relatively low wages, closeness to the U.S. and free-trade deals with more than three dozen nations have made it one of the favorite locations for international automakers to invest since the 2008 global recession and rising energy and shipping prices forced companies to find ways to cut costs. Despite Mexico's surge, the vast majority of the cars and trucks made in North America, are still produced in the U.S. for domestic consumption and export to other countries. And many of the vehicles built in Mexico are assembled with parts that are produced in the United States and Canada and cross the border without tariffs under the North American Free Trade Agreement.

When NAFTA was signed two decades ago, Mexico produced 6 percent of the cars built in North America. It now provides 19 percent. Total Mexican car production has risen 39 percent from 2007, to nearly 3 million cars a year. The total value of Mexico's car exports surged from $40 billion to $70.6 billion over that span. Mexico's government and the car industry say the automotive industry has become the primary source of foreign currency for Mexico. Just 25 miles from the new Honda plant, Mazda is set to open a factory next week to produce 230,000 cars a year. Nissan is expected to turn out 175,000 cars annually at a $2 billion plant it opened late last year in the nearby state of Aguascalientes. And Audi will be producing luxury models at a plant in the state of Puebla that is slated to open in 2016. "We have gained momentum throughout the years," Economy Secretary Ildefonso Guajuardo said. "Now Mexico is attracting international attention because it has proven to have quality of production and a friendly investment climate."