Advertisement

General Motors to Invest $5B to Hike Production in Mexico

General Motors Company (GM) announced that it will be investing $5 billion in Mexico by 2018. The automaker will be utilizing this investment for increasing its production capacity of vehicles, engines and transmissions at its plants across the country.

Of the total investment, General Motors has already invested $1.4 billion. The remaining $3.6 billion will be invested over the next four years.

General Motors will allocate the funds toward the expansion of its four manufacturing complexes in the states of Coahuila, San Luis Potosi, Mexico State and Guanajuato. The automaker will also modernize production lines and update the technology in autos and auto parts. In addition, this investment is expected to create about 5,600 jobs in Mexico.

Apart from General Motors, other automakers are also focusing on Mexico, which is now the seventh largest auto producer in the world. Over the last two years, the automakers have invested about $19 billion in Mexico.

Mexico also recorded an increase in auto production year over year. During Jan to Nov 2014, auto production increased 8.7% year over year and exports rose 8.2%, according to the Mexican Automotive Industry Association (“AMIA”). General Motors’ production volume in Mexico also improved 5% while exports grew 5.6% during this period.

In an attempt to strengthen its operations and launch new and updated products, General Motors plans to make regular investments in its plants. On Oct 2014, the company announced that it will expand the Lansing Delta Township facility by investing $63 million. This investment will be part of the $300 million investment in Michigan and expand the facility by 263,000 square feet.

General Motors intends to focus on the Opel and Vauxhall brands and expand the Cadillac brand in Europe. In China, the automaker proposes to improve margins by continuing to invest in Cadillac and rolling out OnStar communications, its in-car safety system.

General Motors currently carries a Zacks Rank #3 (Hold). Investors interested in the auto industry could consider better-ranked stocks like Meritor, Inc. (MTOR), Harley-Davidson, Inc. (HOG) and PACCAR Inc. (PCAR), all sporting a Zacks Rank #2 (Buy).

Read the Full Research Report on GM
Read the Full Research Report on PCAR
Read the Full Research Report on HOG
Read the Full Research Report on MTOR


Zacks Investment Research