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FAW quits the Mexico plan

Mexico – FAW Group Corp. has cancelled its plan to build an assembling facility in Mexico as it fails to meet the investment requirements set by the Mexican government, according to foreign media reports.

In fact, the global financial crisis and the downturn of light vehicle sales in Mexican market are the major reasons for FAW’s retreat, said the reports.

In 2007, FAW and Grupo Salinas, one of the largest dealers in Mexico, reached an agreement that FAW would invest $150 million to set up a joint venture and build an assembling plant with an annual output capacity of 100,000 vehicles in three years. According to their original plans, the joint venture would manufacture the Xiali, Weizhi and other economy cars carrying FAW logo, and it would also import FAW vehicles from China.

But Grupo Salinas announced in June this year to stop the construction of the assembling facility due to the financial crisis and cancelled all the plans with FAW.

FAW has terminated exporting cars to Mexico since the deal with Grupo Salinas is off.

Analysts believe that the main reason for FAW’s failure to enter Mexican and North American markets is trade protection in Mexico. The Mexican government stipulates that every automotive enterprise which plans to sell vehicles in Mexico must first invest at lest $100 million in the country to set up a plant with an annual output capacity of 50,000 vehicles.

FAW is the first Chinese OEM to set up an importing outlet in Mexico.

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