VW, Ford Look to Mexico

Both Volkswagen AG and Ford Motor Co. are looking to breathe new life into their assembly operations in Mexico, Ward's has learned.

VW plans to consolidate Jetta/Bora car production worldwide at its Volkswagen de Mexico S.A. de C.V. plant in Puebla, Mexico, in order to utilize unused capacity caused by slow Beetle sales in the U.S. It also may add assembly of the new Golf for the North American market, top executives confirm.

Meanwhile, Ford says it will build the '06 Futura sedan in Hermosillo, Mexico, and quietly pursues opportunities to keep open its assembly plant in Cuautitlan.

VW's Puebla plant currently produces Jettas and new Beetles for the North American market. A separate line that made the original Beetle ceased production July 30. It could be retooled for Jetta/Bora production, the majority being Jettas. Output of the Bora, as the Jetta is called in most markets outside North America, traditionally has been centered in Europe.

A falloff in U.S. sales of the New Beetle has reduced Puebla output to 60%-65% capacity, three-quarters of which is exported to the U.S.

The moves to add production at Puebla still are under discussion, and no timeframe has been set, says Frank Maguire, Volkswagen of America Inc. vice president-sales and marketing. Shifting Golf production there from Brazil, where it currently is made for North America, would require finding another product for Brazil, Maguire says.

Meanwhile, sources in Mexico tell Ward's that Ford has made a commitment to maintain, until 2008, its operations in Cuautitlan, where previous-generation, “Heritage” edition Ford F-Series trucks and a pair of Ford small cars — the Fiesta and Ikon — are built. The development of Cuautitlan's local supply base was key to the decision, Ward's is told.

Officially, Ford suggests Cuautitlan remains on the bubble. It was one of several assembly plants — along with two affected by the recently concluded United Auto Workers contract talks — identified as vulnerable when the auto maker outlined its revitalization strategy in 2002.

While Cuautitlan has no new product scheduled past 2005, Ford “continues working on different alternatives,” a spokesman says. “But there is nothing firm yet,” he maintains.