The automotive industry in Mexico and Brazil is one of the most dynamic business in Latin America, with both countries are disputing the 8th place as the highest car producers in the world [a}. While the production of cars in Mexico is directed to foreign consumption, the Brazilian one is mainly directed to its internal and regional markets.
Both countries offer several advantages, such as low labor cost and high qualified personnel, however there are many challenges that must be considered such as pending political reforms and high crime rate in Mexico, and high inflation rate and economic deceleration in Brazil.
Whereas, Mexico is better located geographically, Brazil’s potential internal market makes it the best option to invest currently, as long as it has best regulatory conditions and may offer better tax incentives. Whereas a weak local currency may affect the assembly of cars industry in both countries, Brazil’s infrastructure spending is entering a frenzied period [b] to meet its commitments to host the Olympics (2014) and the World Cup (2016), which may contribute to make it a popular destination for Foreign Direct Investment.