Plans suspended for FAW's new plant in Mexico

Shanghai, June 17 (Gasgoo.com) Grupo Salinas of Mexico has announced that plans for a joint assembly plant to build cars with China's FAW Group have been called off, another victim of the global economic crisis, edmunds.com said.

The cancellation comes only a few weeks after Mexican President Felipe Calderon laid the first stone in place at the site in southern Mexico, in the state of Calderon's birth, Michoacan. The plant, a venture with FAW Group, had a $150 billion investment from Grupo Salinas.

FAW had plans to expand into the United States, by marketing the cars that would be made at the Michoacan plant, whose production, with an initial output of 100,000 units a year, was previously scheduled to start in 2010. "We are postponing the project and we will see how we will be able to resurrect it", Salinas said.

FAW was the last of a group of Chinese automakers that planned to have a manufacturing facility in Mexico, where Geely and Zhongxing have also canceled projects. Grupo Salinas is owned by Ricardo Salinas-Pliego -- number 124 on the Forbes list of the world's richest people -- who made his fortune selling home appliances to Mexican families with poor credit.

As the assembly project has been suspended, Grupo Salinas now will focus on the importation and distribution of cars manufactured in China. The company's Elektra retail stores will sell new and used cars from both FAW and Geely, the company said, and its Banco Azteca will handle financing targeted to low-wage workers of Mexico.

Grupo Salinas sees which way the wind is blowing economically. The multi-billion-dollar Mexican retail and media giant announced its partnership with FAW a year ago.

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