Mexico’s Auto Production Plunges 51 Percent

Country’s single biggest manufacturing sector produced 81,533 vehicles in January, down from 166,149 during the same month last year.

MEXICO CITY (AP) -- Mexico's auto industry reported a 51 percent plunge in January production and warned Wednesday that car makers were going through their worst crisis in decades.

The grim news came as the government detailed a plan to protect jobs in the auto sector and other troubled industries through a 2 billion peso ($140 million) fund.

Mexico's auto industry -- the country's single biggest manufacturing sector -- is reeling from plunging domestic and foreign demand for cars. The country sends 70 percent of its auto exports to the United States.

Vehicle production was 81,533 in January, down from 166,149 during the same month last year, the auto association said in a report. Exports fell 57 percent to 51,061 vehicles, while domestic sales dropped 28 percent to 69,664 amid tightening credit markets for Mexican consumers.

"The automotive industry is going through one of its worst crisis in decades," the report said.

Mexico has been trying to expand its market for cars beyond the United States, but the January results showed demand plunging across the world as the economic crisis takes hold. Exports to Europe plummeted 71 percent in January, and only sales to Canada rose.

Calderon said the 2 billion peso fund was aimed at protecting 500,000 jobs in the auto, electronics and machinery industries, the most reliant on exports abroad.

The government will use the fund to pay for one-third of the salaries of workers when their companies temporarily freeze production because of the crisis.

The first 20 companies signed up for the program Monday, said Lorenza Martinez, the deputy secretary for industry and commerce. She said Volkswagen was among the participants but did not name others. The program could benefit up to 1,800 companies, she said.

Hundreds of auto workers have lost their jobs in the past year.

Calderon also stepped into a spat between the government and telecommunications magnate Carlos Slim, who angered officials earlier this week by predicting that unemployment in Mexico would reach its worst level in decades this year. Slim is one of the richest men in the world.

"The important thing, my friends, is not who gives the gravest predictions or who is able to sow the most fear in Mexicans, but what each of us ... can do for Mexico," Calderon said in a clear reference to Slim's remarks. "We are all obligated to support Mexico in these difficult times, especially those of us who have received the most from this great nation."

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