BMW looks for clear guidance from Mexican government for investment

German automaker BMW, which is constructing its first plant in Mexico, is looking for clear indications from the new government of President Andres Manuel Lopez Obrador that would ensure stability to invest in the nation, a top executive stated.

To plan its future the company requires “robust premises in terms of how the government is taking decisions, what are its priorities, its international stance, how the budget is managed,” Alexander Wehr, president and CEO of BMW Group Mexico, Latin America and the Caribbean, informed Reuters during an interview on Friday.

Wehr stated that BMW was keeping an eye on Mexico’s sovereign rating and domestic purchases of cars.

Ratings agency S&P during the previous week put Mexico’s sovereign debt on a negative outlook and stated there was a one-in-three chance of a sovereign downgrade in 2020, although not yet to junk.

Moody’s Investors Service stated in a report on Tuesday that intensifying violence and crime in Mexico raised doubts about security-related credit risks for companies and economic dangers for states and municipalities.

Lopez Obrador came to power on a platform pledging to fight entrenched corruption, crime, inequality and poverty, which are significant scourges that he says these issues cost the Mexican treasury billions of dollars annually.

He agrees the nation’s requirement for healthy private investment and public spending.

But some of his early moves, such as canceling a partially constructed Mexico City airport and attempts to undermine the autonomy of regulatory bodies, have frightened investors.

BMW’s plant in San Luis Potosi is going to start operations in mid-2019 and will have a production capacity of about 175,000 units annually. It will only produce the Series 3 model and not the other brands in the group, inlcuding Mini, Rolls-Royce and Motorrad.