Comments by "Yo2" (@yo2trader539) on "" video.
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Mexico is booming with near-shoring investments from Tech to auto-components, and the challenge is attracting and retaining skilled workers. They all struggle with Mexican electricity infrastructure and increasing costs. Mexico is not a cheap production site at all.
For many automakers, Mexican factories provide vehicles both for North and South America, so it's a very strategic location. It's very important because Latin American is one of the weakest regions for Toyota. And you missed the most important point of this video (and the Reuters article), which is that Toyota is facing a supply-chain issue in Mexico.
Currently, Toyota's production capacity is maxed out and cannot meet the full demands of their customers. Some customers are waiting months for their vehicle whether in Canada, Australia, NZ, Europe, or the US. Despite the current strong demand, Toyota had to lower their daily production target in Japan for FY2024 from 15,000 cars per day to 14,000 because they were working too hard to deliver cars. They realized they were running too fast and it was unsustainable.
Toyota's operating profit margin for North America is extremely low, far below other regions. Toyota lost money in FY2022 in North America, and FY2023 was around 3% OP margin. In other words, too much money is taken by the dealership, which is independent from Toyota. Also labor cost isn't a large component in the production cost of a car.
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