Ford Motor Co., is planning to planning to build a new assembly plant in San Luis Potosí and expand an already existing one in Mexico City, in a bid to double its vehicle production in the country by 2018, according to multiple sources.
The plant will represent a $1.5 billion investment and allow Ford to build 350,000 cars annually, according to Reuters, who first reported the potential move last month. At the time, Ford declined to comment on the impending move, saying, "We do not comment on speculation."
However rumors had been circulating that Ford would be focusing its operations in Mexico even before the Reuters report was published. Last June, Ford confirmed plans to end production of the Ford Focus and Ford C-Max at Michigan Assembly in Wayne in 2018 and move production of those cars outside of the country. UAW officials said at the time that at least production of the Focus would move to Mexico and Ford executives said they were looking for a cheaper option to build lower profit vehicles like the Focus and C-Max, and Mexico would allow those plans to come to fruition, according to The Detroit News.
Now Ford is expected to formally announce the plans in the first quarter.
The automaker will add 500,000 units of annual capacity in Mexico starting in 2018, which is projected to double the capacity it had 2015, according to MarketWatch, citing people familiar with the plan. Ford last year built 433,000 vehicles in Mexico, representing 14 percent of its North American production.
Ford has become the latest automaker to expand operations in Mexico to capitalize on the country's lower labor rates, efficient port and rail system and free trade agreements. General Motors Co., last year announced a $5 billion investment there over six years, while Toyota Motor Co., said it will invest $1 billion in a Mexican plant. BMW AG, Nissan Motor Co., Kia Motors and Fiat Chrysler Automobiles NV also have built or announced new plants or plant expansions there.