Automotive industry is a major industrial and manufacturing sector in Mexico. Economic slowdown in US has not affected Mexico automotive industry.

In 2005, automotive industry in Mexico generated revenues of about $42 billion. In terms of percentage of GDP, it stands next only to the food industry. But a decrease in US sales and investments in Asian and European countries has made it difficult for Mexico's automakers to maintain its impressive growth rates.

Top automakers in Mexico
Some of the best automobile companies conduct operations in Mexico. General Motors, Ford Motor, DaimlerChrysler, Nissan, and Volkswagen are some major automakers in Mexico.

Advantages for automakers in Mexico
There are many reasons why automobile companies find it profitable to conduct business in Mexico. Mexico is located close to the world's largest automobile market. That facilitates production integration since cars and parts can be shipped by rail and truck. In Asian countries cars and parts have to be shipped on freighters.

Another distinctive advantage that Mexico offers to automobile companies is low operational costs. In US, a unionized worker is paid an hourly wage of at least $27. That is a lot higher than Mexico's automotive industry's hourly wages of $3.50.

For a long time now, Mexico has been producing cars and trucks for US market. This has created an experienced workforce of about 430,000 in Mexico.

Trade agreements
North American Free Trade Agreement (NAFTA) has enabled Mexico to conduct business in the US market without paying duties. For dealings between Mexico automotive industry and US market, border is almost non-existent.

Mexico shares free trade agreement with many countries including European Union, Latin American countries, and Japan. This has allowed Mexico to ship cars to different parts of the world with low or nil tariff.

Future prospects
Though the US economic slowdown has affected Mexico's automotive industry, future prospects look bright for automakers in Mexico. Future investments may increase production of cars to three million by 2012. Focus is more on new models, since in recent times, sale of old models has seen a slump. It's also predicted that by 2012, Mexico will account for nearly 14 percent of North America's total production.