MEXICO CITY (Reuters) - German carmaker BMW, which is building its first plant in Mexico, is looking for clear signs from the new government of President Andres Manuel Lopez Obrador that would guarantee stability to invest in the country, a top executive said.
To plan its future the company needs “robust premises in terms of how the government is making decisions, what are its priorities, its international stance, how the budget is handled,” Alexander Wehr, president and CEO of BMW Group Mexico, Latin America and the Caribbean, told Reuters in an interview on Friday.
Wehr said that BMW was keeping a close watch on Mexico’s sovereign rating and domestic sales of cars.
Ratings agency S&P last week put Mexico’s sovereign debt on a negative outlook and said there was a one-in-three chance of a sovereign downgrade in the coming year, although not yet to junk.
Moody’s Investors Service said in a report on Tuesday that intensifying violence and crime in Mexico raised concerns about security-related credit risks for companies and economic risks for states and municipalities.
Lopez Obrador came to power on a platform vowing to fight entrenched corruption, crime, inequality and poverty, which are major scourges that he says cost the Mexican treasury billions of dollars every year.
He acknowledges the nation’s need for healthy private investment as well as public spending.
But some of his early moves, such as cancelling a partially built Mexico City airport and attempts to undermine the autonomy of regulatory bodies, have spooked investors.
BMW’s plant in San Luis Potosi will start operations in mid-2019 and will have a production capacity of up to 175,000 units per year. It will only produce the Series 3 model and not the other brands in the group, such as Mini, Rolls-Royce and Motorrad.
Reporting by Sharay Angulo; Writing by Anthony Esposito; Editing by Chizu Nomiyama