Starting in May 2024, the products of the Chinese automobile company Great Wall Motor (GWM) will be manufactured at the Iracemápolis plant, in Greater São Paulo. The Chinese bought the plant from Mercedes-Benz. The Germans had barely built the factory in 2016. The C-Class and the GLA compact model were produced there. But sales did not meet expectations, so in August 2021 the Germans sold the plant to the Chinese, who want to use it to strengthen their presence in Latin America. In July, the fast-growing Chinese electric car maker BYD announced a $290 million investment in a lithium cathode factory in northern Chile. BYD already produces at a plant in Bahia, on the east coast of Brazil.
More than ten billion euros for Brazil
These are two pieces of news among a whole series of recent announcements of millionaire and multimillion-dollar investments in the automobile industry in Latin America. The structural change from combustion cars towards electric mobility, as well as the increasingly strong Chinese automobile industry, which has identified Latin America as a market for expansion and production, are creating an investment race in the region. The Automotivebusiness portal recently commented, only for the Brazilian market: “Automobile manufacturers want to invest more than 50,000 million reais (about 10,000 million euros) in Brazil between now and 2025.”
Winners are classic production locations
The winners of this development are above all the classic production sites, like Mexico and Brazil. They have decades of experience in vehicle production and are also geographically close to the so-called “lithium triangle” of Argentina, Bolivia and Chile. It is believed that around two-thirds of the world’s lithium deposits are found here, which is of paramount importance for the production of electric car batteries. Large investments are also expected from there: For example, Ford announced an investment of 660 million dollars to produce the new generation of the Ranger model in Argentina.
Mexico expects a job boom
In Mexico, the other classic car producing country in Latin America along with Brazil, the industry is confident that the development will create new jobs in the Mexican auto parts and automotive sector. To avoid a shortage of skilled workers, the National Auto Parts Association (INA) says it is working on “the updating and creation of courses and training for people already working in the industry, as well as educational plans for young people“.
Germany also focuses on Latin America
“The German automobile industry can benefit from the advantageous location conditions in Latin America and is therefore present in Mexico, Brazil and Argentina,” a spokeswoman for the German Automotive Industry Association (VDA) stated in response to a question. DW query. Mexico in particular, with its relevant internal market on the one hand and its geographical proximity to the United States on the other, it represents a suitable production location for numerous automobile manufacturers and suppliers, also German: With the exception of the record year 2019, German manufacturers have never produced as many vehicles in Mexico as in the past year 2022 (634,300 units), according to data. “Thus, the production volume of German vehicle manufacturers in Mexico has more than doubled in the course of the last 20 years,” said the VDA spokesman.
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