Elektra teams up with FAW for low-cost cars

8 December, 2007

BY OUR AUTOMOBILE CORRESPONDENT

Grupo Elektra, the Mexico-based appliance and electronics behemoth, is teaming up with First Automobile Works Group to build a plant in central Mexico.

According to an auto industry news source, the plant is expected to boast of a capacity of 100,000 vehicles a year. The companies will pool in their individual talent to make low-cost cars, which are expected to be lapped up by Mexico's emerging middle class.

The plant that will be built on an investment of around $150 million, is expected to go on stream after 2010. As and when the cars roll out of the new assembly line, First Automobile Works will begin exporting cars to Mexico. The subcompact vehicles would sport a price tag of just $6,000. The combine is aso planning to have 20 new, stand-alone dealerships.

The plant will employ about 2,000 workers when it opens after 2010 and plans call for doubling both the workforce and production if the vehicles prove a hit. The venture will be looking to export vehicles to other markets in Latin America and perhaps eventually to the United States.

As per the deal, First Automobile Works would take care of the distribution and financing. Founded in 1956, First Automobile Works is one of China's largest automakers, with sales of more than 1 million vehicles in 2006. The company has teamed with Volkswagen, Toyota and Mazda to build and sell their models in the fast-growing China market, the report added.

The venture is expected to initially focus on manufacturing entry-level vehicles, with the aim of offering consumers cars with more extra features than they would find in comparable subcompacts at prices 5 per cent to 10 less than the current average price in the market.

An assembly plant is also planned in China’s Tijuana to export low-cost sport utility vehicles and pickups to the United States.