Tata To Build Assembly Plant in Mexico

MEXICO CITY — The ultra-low-cost Tata Nano edges closer to the North American market with news that Tata Motors of India will build an auto plant in central Mexico. Grupo Autofin, a Mexican automotive financing company, is the local partner.

Grupo Autofin, which recently became a manufacturer of motorcycles and urban buses, will help Tata Motors with domestic legal matters, develop local suppliers, and may help with the investment as well.

The project was first discussed publicly last year by an executive from PROMEXICO, a federal investment and export promotion agency, and this week Grupo Autofin officially shared the plans with Mexican newspaper El Universal. Reportedly the plan, which has not yet been finalized, consists of building a couple of vehicles, which most likely will be small compact cars. Mexico would also be a strategic location to supply Latin American countries, and in the future approach the U.S. market.

The plant could begin operations as early as 2012 and is estimated to average some 50,000 units of production a year.

Mexican law dictates every auto company must build at that many per year and invest at least $100 million. This criterion allows automotive companies to qualify for tariff-free treatment when importing cars and auto parts from overseas, a critical element in the supply chain. Applicable import tariffs for Indian cars without the investment requisite would be 20 percent, a gap that would diminish any competitive advantage gained from producing in India.

The popular Nano, the cheapest car in the industry, which will sell soon in India for only $2,500, might be introduced under the import plan at a later date.

Source: Indiacar.com Source : http://www.insideline.com (3/1/2010)