Hyundai Motor Company is shifting some of its small car production from South Korea to Mexico. This strategic move allows Hyundai to leverage Mexico’s lower labor costs and proximity to key North and South American markets. Hyundai Mexico will join a growing list of auto manufacturers already operating in the country.
Hyundai’s Strategic Move to Mexico
Hyundai’s decision to establish Hyundai Mexico operations reflects a broader trend in the automotive industry. Mexico has attracted significant investment in recent years, solidifying its position as a major automotive manufacturing hub. Beginning in 2017, Hyundai will produce its next-generation Accent, known as the Hyundai Verna, in a Kia-owned plant in Mexico. This facility will likely also manufacture the Kia Rio.
This shift will significantly reduce labor costs, estimated to be five times lower in Mexico compared to South Korea. Additionally, the location provides easier access to the North and South American markets, crucial for Hyundai’s global sales strategy. The initial production target for the Hyundai Verna in Mexico is 20,000 units annually, increasing to 76,000 in 2018 and 100,000 in 2019. This demonstrates Hyundai’s commitment to its Mexican operations.
Mexico: A Growing Automotive Powerhouse
Mexico’s automotive industry has experienced remarkable growth, attracting over $24 billion in new investments in the past five years. The country hosts eighteen production facilities across eleven states, manufacturing vehicles for many leading global automakers.
Besides Hyundai Mexico, established manufacturers like General Motors, Chrysler, BMW, Volvo, Mercedes-Benz, Daimler, Ford, and Mazda already have a strong presence in Mexico. This vibrant ecosystem provides a skilled workforce and established supply chains, further benefiting Hyundai’s operations.
The Next-Generation Hyundai Verna
The next-generation Hyundai Verna, set to be produced in Hyundai Mexico’s new facility, features a redesigned exterior based on Hyundai’s “Fluidic Sculpture 2.0” design language. The interior has also undergone significant upgrades. While retaining the existing engine with minor enhancements, the Verna might also incorporate a turbocharged Kappa engine. Transmission options will include a manual transmission and a new 7-speed Dual Clutch Transmission, replacing the older 4-speed and 6-speed automatic systems.
Conclusion
Hyundai’s expansion into Mexico marks a significant step in the company’s global strategy. By leveraging Mexico’s competitive advantages, Hyundai aims to strengthen its position in the North and South American markets. The production of the next-generation Verna in Mexico signals Hyundai’s commitment to innovation and competitiveness in the global automotive industry. Hyundai Mexico’s establishment reinforces Mexico’s rising prominence as a key player in the global automotive landscape.
