Volvo invests 700 million US dollars in a new plant in Mexico

The Swedish car manufacturer Volvo has chosen the northern Mexican state of Nuevo León to build its assembly plant for heavy trucks. The company will invest 700 million US dollars in Monterrey, the state's capital. The announcement comes shortly after the US electric car manufacturer Tesla put its plant, also planned in the state of Nuevo León, on hold.

According to Volvo's plans, the plant in Mexico will complement production for the US market and create additional capacity for Volvo Trucks' and Mack Trucks' growth plans in the US and Canada. In addition, the factory, which is scheduled to be operational in 2026, will create additional capacity for Mack Trucks' truck sales in Mexico and Latin America. The US vehicle manufacturer Mack Trucks is part of the Volvo Group.

Volvo sets its sights on North America

"The plant in Monterrey represents an investment of around 700 million US dollars and will focus on the production of conventional heavy commercial vehicles for the Volvo and Mack brands. It will be a complete plant for the assembly of conventional vehicles, including body-in-white production and painting," Volvo said in a statement. Growth in North America is a "strategic priority" for the Group.

Volvo described the new plant in Mexico as part of a comprehensive effort to strengthen the supply chain in the region and also announced further investments in the USA. "This includes an agreement to acquire a production facility from Commercial Vehicle Group (CVG) in North Carolina, which manufactures cabs for Mack heavy and medium-duty trucks, for approximately 40 million US dollars," it said. The deal was announced on August 1 and is expected to close in the second half of the year.

Mexico as a mecca for car manufacturers

Volvo's multi-million investment fits in with the trend. Numerous international automotive groups have set up assembly plants in Mexico to assemble vehicles there and then sell them duty-free across the border to the USA. Together with the USA and Canada, Mexico is part of the North American Free Trade Agreement USMCA (formerly NAFTA). German car manufacturers such as VW, Audi and BMW are represented in the country. BMW plans to assemble New Class electric vehicles at its plant in San Luis Potosí in northern Mexico from 2027. To integrate the plant into BMW's global network for electromobility, 800 million euros are to be invested over the next few years.

More and more Chinese car manufacturers are also settling in Mexico to target the US market from there. Chinese commercial vehicle giant Dongfeng is planning to open a new plant in Mexico by 2025, while BYD, the world's largest manufacturer of electric cars, is pressing ahead with its plans to open a factory in Mexico. In contrast, Tesla CEO Elon Musk declared a month ago that he was halting the construction of the planned Tesla Gigafactory in northern Mexico. Musk explained that he wants to wait for the outcome of the US elections on November 5 to decide whether the project will go ahead.

(akn)