VW to spend $1 billion on Mexico assembly plant expansion for Tiguan

March 10
10:30 AM 2015

German carmaker Volkswagen will invest about $1 billion to expand its vehicle assembly plant in Mexico's Puebla state and prepare it for production of the new Tiguan compact crossover SUV, the company said on Monday.

The investment is focused on new assembly lines and will generate some 2,000 jobs, Andreas Hinrichs, chief executive of Volkswagen Mexico, said as he unveiled the expansion plan.

Production of the Tiguan will begin in late 2016, the company said, with the vehicles hitting the market the following year. Volkswagen will produce around a million of the vehicles at the plant over eight years, Hinrichs said. Some of the Tiguan produced will be sold in Mexico.

As of December, investment in the auto sector in Mexico totaled $19 billion under President Enrique Pena Nieto, who took office two years earlier, according to government data.

Volkswagen, which opened its Puebla plant in 1964, last year produced 475,121 vehicles out of about 3.2 million autos manufactured in the country, Mexican Automotive Industry Association (AMIA) data show.

Mexico is the seventh biggest manufacturer of autos and the world's fourth largest exporter, according to AMIA. Over 80 percent of those vehicles are destined for sale abroad.

Total auto production increased 27 percent last year, compared with 2013, and AMIA has predicted that Mexico will produce more than 5 million vehicles by 2020.

Mexican auto production jumped 14 percent in February to 282,856 units versus the same month a year earlier, the Mexican Auto Industry Association (AMIA) said on Monday. Exports rose 12.6 percent to 222,351 units, AMIA added.

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