Friday night cruisin’

Jesus’ General has up a post on the wacko Major James Linzey.  The Major (like William Randolph Hearst a hundred years ago) believes the yellow hoardes are plotting with the Mexicans to invade the U.S. (in Hearst’s day it was the Japanese)  Which might be slightly true, though it isn’t an army that’s coming — but it’s cars not soldiers.

I’m not sure if  the cars — or their provinence — is the interesting part of the story:

Construction began Friday on an auto assembly plant in central Mexico that will create thousands of jobs and be the country’s first to produce Chinese cars.

Mexican President Felipe Calderon led groundbreaking ceremonies for the factory, which will be financed by an arm of Mexican conglomerate Grupo Salinas and China’s state-owned FAW Group Corp., one of the nation’s largest automakers.

“Most of the world’s investments used to go to China, and today China has come to invest in our country because it recognizes an enormous opportunity in Mexico thanks to its domestic market” and proximity to the U.S. and Latin America, Calderon said.

Due to open by 2010 in Michoacan state, the plant is expected to churn out 100,000 cars a year for sale in Mexico and Central America, according to a statement from Grupo Elektra, Grupo Salinas’s electronic goods and consumer financing unit.

Grupo Elektra and FAW are investing $150 million to construct the factory, which is expected to employ some 4,000 people and bring up to 20,000 additional jobs to the local economy, Javier Sarro Cortina, head of Grupo Salinas Motors, said Friday.

FAW-line cars will start selling in Mexico early next year for as much as 10 percent less than the current market average, Grupo Elektra said.

The cars will retail for as low as $6,280, Grupo Salinas chairman Ricardo Salinas Pliego said at the groundbreaking.

Chevrolet’s smallest Chevy sedan, one of Mexico’s most affordable cars, sells for about $7,100.

I think what Grupo Electra is going to market are the Jiaxing MPV, with a three-cylinder engine and at least some Toyota parts. They’re probably crappy little cars…. BUT…

• Working families can afford them. This means more Mexicans than ever will join the “car culture” — for good or bad, I can’t say. Certainly, I’d expect poor people to want the stuff that middle-class people have. And one of the great success stories of Mexican business was Prince von Hoheloeh convincing VW to manufacture sedans (i.e., the “bug”) in Mexico… everyone wants to move up, and if the Mexican middle-class couldn’t get exactly the same cars as their neighbors to the north in the 1950s, they could get a car at any rate… and move to the burbs, and tear their hair out commuting, and complain about parking spaces, and…

• Cheap labor does not mean a salable product. The Indian computer (and everything else) giant, Tata, had to move some production to Guadalajara. Mexico’s education system could stand improvement, but it turns out a relatively healthy crop of qualified engineers. India’s system turns out very good engineers (who make more money going abroad) and less-than-adequate ones.

I wrote about Chinese autos once before, when early reports had the cars being built for a “U.S. beachhead” market.  Either the original reports were confused, or the business plan wasn’t complete.  But moving production to Mexico makes sense.  Mexican have been manufacturing reliable cars since the early 1950s (and tractors and trucks much earlier), and FAW has only been around a few years ago, the heir to the company that built those knock-off Checker Cabs the Chinese built to ferry around Maoist leaders (and Richard Nixon). I don’t know if they’ll have a FAW nameplate or something more Mexican, but see no reason they’d be seen as “Chinese” any more than the generic Tsuru (a Mexican version of the Nissan Sentra) is seen as a Japanese car.

• Retailing. This is brilliant. I considered buying a motobike at a Mexican WalMart, and I would have had to pay up front or put it on layaway (they only cost a few thousand pesos) but these are CARS! Grupo Electra pioneered the retail bank in Mexico (Banco Azteca) leaving WalMart and Cheduri to play catch up.

Which means a family can walk in, but a car (and a washing machine and a TV and a sofa and …) take out a bank loan and go on their merry way. Though, of course, it also means the Mexicans will be consuming a lot more of their oil (which is the #1 or #2 — depending on the month — source for our foreign oil) at home.  That’s not necessarily a good thing, but what can you do?

 Of course, after talking about commies and cars… and it being Friday and all…