MEXICO CITY — Mexico's largest specialty retailer said Thursday that it was partnering with one of China's Big Three automakers to build a plant in central Mexico that would have the capacity to produce 100,000 vehicles a year.
Appliance and electronics giant Grupo Elektra and Beijing-based First Automobile Works Group are scheduled to hold a groundbreaking in the state of Michoacan today, when the companies will detail their plans to build and finance low-cost cars aimed at Mexico's emerging middle class.
For The Record
Los Angeles Times Friday, December 14, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 53 words Type of Material: Correction
Chinese car company: An article in Business on Nov. 23 about a Chinese carmaker entering into a partnership to build an assembly plant in Mexico gave the company's name as First Automobile Works Group and said it was Beijing-based. The correct name is China FAW Group Corp. and it is headquartered in Changchun.
Although the $150-million plant isn't slated to open until 2010, First Automobile Works will begin exporting cars to Mexico immediately, said Daniel McCosh, a spokesman for Grupo Salinas, Elektra's parent. He said subcompact vehicles retailing for as little as $6,000 should be available by year's end through some of Elektra's 823 retail outlets in Mexico.
Plans call for 20 new, stand-alone dealerships in the first quarter of 2008 and a nationwide dealer network within five years, most likely under the well-known Elektra banner.
The deal gives First Automobile Works instant distribution and a strong financing arm in Mexico -- as well as a North American platform to enter the U.S. market. Elektra, a pioneer in granting credit to working-class consumers, sees a major opportunity to put its customers in a set of wheels.
"People have traditionally looked to Elektra for big-ticket items that they couldn't otherwise afford," McCosh said. "We're basically attending to clients' demands."
Founded in 1956, First Automobile Works is one of China's largest automakers, with sales of more than 1 million vehicles last year. The company has teamed with Volkswagen, Toyota and Mazda to build and sell those companies' models in the fast-growing China market.
Mexico has one of the most vibrant and wide-open vehicle markets in Latin America. More than 1.1 million new cars and trucks were sold here last year, putting the country on pace to surpass Canada by the end of the decade. Fewer than 2 in 10 Mexicans currently own a car. The population is young and eager to hit the road. A stable economy and an explosion of consumer credit mean many of them are looking for a first car.
McCosh couldn't specify which First Automobile Works models would be produced in Mexico. But he said the venture initially would focus on manufacturing entry-level vehicles, with the aim of offering consumers cars with more extra features than they'd find in comparable subcompacts at prices 5% to 10% below the competition.
