Volkswagen is a member of the of the Volkswagen Group, where it is sharing the umbrella with other brands like Audi, Seat, Lamborghini, Skoda, Bentley and Bugatti (some of them sharing the platform). The Volkswagen plant in Mexico opened 1967 in Puebla, and is one of Mexico’s largest car plants and the thirds largest Volkswagen plant in the world. At the plant’s peak, the company in Puebla employed over 12.000 workers. With all the employees and its suppliers, it altogether employs 100.000 workers. The plant is the only one in the world producing the New Beetle, Bora and the Jetta A4 and Jetta A5 with a shared platform, which all are sold at the Mexican market or exported to the US, Europe and Japan. Currently the plant has a rrently the plant has a capacity of 200.000 units annually. its annually.
Volkswagen Mexico (VW MX) believes that the main opportunity with the Mexican market is the geographical closeness to the US. This closeness was the main reason for entering the Mexican market with production. Mexico has various FTAs and this makes it possible to export without any added taxes, as long as the local content of the products are at least at a 60% level. Local content in this context implies that at least 60% of all parts in the final vehicle must have local origin, which means that the parts must either come from production in Mexico or the country which receives the export. VW MX argues that this has conveyed the suppliers in the industry to move production to Mexico in order to stay competitive and VW MX is also encouraging its suppliers to start with production close to its plant. Even though the company exports approximately 80% of the total production, VW MX considers that the rate will change in the future. It states that the purchasing power of the Mexican citizens will increase and has therefore forecasted that 50% of the production will stay within the Mexican border in the future. VW MX...