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In Mexico, China and Japan seek to replace US

Monday, February 6, 2017

The announcement last week of a new Mexican automobile production plant, may be a signal as to how to attract new projects, if the Trump administration imposes restrictions on foreign investment by American companies.

Mexico's Giant Motors Latinoamerica S.A. de C.V. and China's Anhui Jianghuai Automobile Company, Limited (JAC Motors) will assemble up to 10,000 vehicles during the next four years in a facility in Sahagun City, some 50 kilometers north east of Mexico City.

Investment in the project, estimated at $212 million, will come partly from Japanese distributor Chori Company Limited, and partly from Grupo Financiero Inbursa, S.A.B. de C.V..

Both Inbursa, a financial services company, and Giant Motors, a truck manufacturer, are controlled by Mexican industrialist Carlos Slim.

The project involves upgrading an existing plant, which will make the S2 and S3 SUV models of JAC Motors.

A state-owned vehicle manufacturer, based in Anhui Province, JAC may also use the Mexican facility to produce electric cars, including the iEV, which the company has exported to the United States from China since 2014.

It is not clear whether Mexican-made vehicles would be intended for domestic sale or for export to the United States.

Sending vehicles to the United States would not likely be an option, to the extent that the United States imposes duties on goods manufactured in Mexico, as the Trump administration has suggested might happen.

On the other hand, this project and others like it, could be export platforms, in the event that the United States imposes no new tariffs, while discouraging American companies from investing abroad.