Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Total per Vehicle Cost Advantages of Producing a Vehicle in Mexico for U.S. or Europe
#1
Mexican automotive production has been a topic of recent debate. Since 2009, automakers—including BMW, Honda, Hyundai-Kia, Mazda, Nissan, Toyota, and VW/Audi—have announced eight new assembly plants investments in Mexico totaling $9 billion. What is missing from the conversation is that Mexico’s low labor costs may no longer be the prime driver of these investments; Mexico’s free trade agreements allow manufacturers to reach customers in countries representing 60 percent of the world’s GDP tariff-free.

CAR researchers estimate that making a vehicle in Mexico results in $600 to $700 lower labor costs per car than if the same vehicle were made in the United States.

Some of the benefit of lower labor costs in Mexico is offset by the higher worker attrition rates than found in U.S. assembly plants. However, labor cost savings only account for about half of the cost savings for vehicles that are then sold in the United States, and less than 15 percent of the total cost advantage for vehicles that are exported from Mexico to Europe for sale.

This comparison shows the cost savings for producing a $25,000 mid-size car in Mexico for sale in the United States, versus producing that same car in the United States. It also shows the cost savings for producing the same mid-size car in Mexico for sale in Europe compared to producing it in United States to be sold in Europe.

[Image: MexArticleChart.jpg]

https://www.cargroup.org/the-move-to-ass...low-wages/
Más vale pocos pelos, pero bien peinados.
Reply
#2
[Image: 2r24oia.png]
Más vale pocos pelos, pero bien peinados.
Reply
#3
OK then, so what happens if Trump imposes a 25% tariff on cars made in Mexico and imported to the USA?

Well, BMW, Honda, Hyundai-Kia, Mazda, Nissan, Toyota, and VW/Audi and any other foreign manufacturers producing cars in Mexico for the US market would lose their $1,200 per car cost advantage and move all their production to the United States. Thousands of more Americans would be hired at $60 per hour, including benifits, and thousands of Mexicans would lose their jobs at $13 per hour, including benefits.

So, let us say the manufacturers pass on that $1,200 price increase to the car buyer. That is only 20 hours labor for some brand new US auto worker who got hired out of the unemployed labor pool because those cars are now made in the USA. Instead of taking money out of the US Treasury for welfare and medical, they would be taxpayers putting money into the treasury.

Now, of course,  financial geniuses like Ron Hoff, think a tariff is a disaster. Of course, neither him nor any of his sycophants have an economics degree, much less an MBA. So what do they know?

[Image: 2qjjdvl.png]
Más vale pocos pelos, pero bien peinados.
Reply


Bookmarks

Forum Jump:


Users browsing this thread: 1 Guest(s)

 USA Dollar to  MX Peso Converter