Chinese automaker eyes plants in two Mexico states hit by Trump

China, a low-cost manufacturing rival to Mexico, has traditionally invested little in Latin America's second largest economy. (Reuters)

MEXICO CITY/BEIJING – Chinese automaker Great Wall Motor Co Ltd is considering building an auto plant in two Mexican states hit by U.S. President Donald Trump's drive to make American companies invest at home, sources said.

Great Wall Motor, which describes itself as China's largest SUV and pickup manufacturer, is interested in building a plant in Nuevo Leon in northern Mexico or the central state of San Luis Potosi, three people familiar with the matter said.

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Under pressure from Trump to keep jobs in the United States, Ford Motor Co in January canceled a $1.6 billion plant in San Luis Potosi, while heating and air conditioning firm Carrier in December scaled back plans to move production to Nuevo Leon.

Great Wall Motor officials met with Mexico's top railroad firms, Ferrocarril Mexicano, part of Grupo Mexico, as well as Kansas City Southern de Mexico, to evaluate the states' connectivity, according to a source and two documents seen by Reuters.

One of the sources said the company was in direct talks with Nuevo Leon's government.

Another source said the automaker was also eyeing a U.S.-based plant but gave no further detail on locations.

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A senior Great Wall Motor executive, speaking on condition of anonymity, said the choice between U.S. and Mexican locations would depend on trade issues involving the United States, Mexico and China.

Great Wall Motor and Ferromex did not immediately respond to requests for comment. A spokesman for Kansas City Southern de Mexico confirmed Great Wall Motor officials met the company, but declined to provide further details.

A pledge by the Chinese firm could bolster Mexico's efforts to reduce dependence on U.S. trade and investment as Trump threatens to rip up the North American Free Trade Agreement (NAFTA) and rails against U.S. firms moving jobs south.

China, a low-cost manufacturing rival to Mexico, has traditionally invested little in Latin America's second largest economy. But there are signs that could be changing.

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In February, China's Anhui Jianghuai Automobile (JAC Motor) and distributor Chori Company unveiled plans with a firm part-owned by Mexican tycoon Carlos Slim to invest over $200 million in a car plant in the central state of Hidalgo.

According to one of the sources, construction on the Great Wall Motor plant could get underway next year and cost about $500 million. It would produce some 250,000 autos a year for the American and Mexican markets and seek to use Chinese inputs, the person added.