Chinese auto maker BAIC is planning to begin construction of a plant in Mexico in 2020 that will start building electric and internal combustion engine vehicles in 2022.

During his third visit to the country, the company’s executive vice-president said BAIC believes Mexico is the best option in Latin America to open a new plant.

“We receive a lot of delegations in Beijing from different states in Mexico and we talk with them about the automotive industry in Mexico and we see potential for investment,” Li Xingxing said.

The state-owned company already uses a production line in a Veracruz facility operated by Mexico-based AT Motors for the final assembly of vehicles it sells in the domestic market.

But because none of the actual manufacturing process is completed in Mexico, each BAIC vehicle pays a 21% import tariff.

From its own Mexican factory, the company intends to sell cars locally, export to countries in South America such as Chile, Colombia and Brazil and eventually ship vehicles to the United States.

Samuel Echeverría, director of operations for BAIC in Mexico, said that eight states are vying to attract the Chinese automotive company.

He explained that the firm is currently weighing its options but suggested that it could ultimately decide on a state in the Bajío region, central Mexico or the southeast of the country. The new plant is expected to generate around 2,000 jobs.

Echeverría said the exact amount that will be invested in the new plant has not yet been fixed but added that it would be less than US $2 billion, a figure that was floated by anonymous company sources earlier this year.

He added that the plant would have an initial production capacity of 20,000 units a year. BAIC currently sells six models in Mexico but sales remain quite low – just 2,000 units in 2018.

However, the company anticipates that domestic sales will increase to between 4,000 and 6,000 next year and for the first time it will enter Mexico’s electric car market.

BAIC already has 34 dealerships in Mexico and plans to open 15 more in 2019 and a further eight in 2020. The company first entered the Mexican market in 2016.

The plant planned for Mexico would be BAIC’s seventh outside China and its first in the Americas.

Source: El Economista (sp)