Mexican company gears up for sports car market

McClatchy NewspapersSeptember 1, 2011 

OCOYOACAC, Mexico — When Mexico's first two-seat production sports car rolls out of the plant in a few weeks, at stake will be not just automotive bragging rights but also national pride.

There have been plenty of naysayers. Automotive commentators in England were so derisive of the idea of a Mexican sports car earlier this year that they set off a diplomatic fracas. Mexico demanded an apology, and got it.

Sometime in September, the first Mastretta MXT, a Mexican-designed high performance sports car, will roll out of a factory here, 30 miles west of Mexico City. Owners are promised an exhilarating experience when they hammer the accelerator.

The hand-built, rear-engine MXT accelerates from 0 to 60 mph in 4.6 seconds. Its designers say it's built for people who itch to get off the street and onto the track.

"We are targeting a niche," said Jean-Paul Capin, the chief financial officer of Mastretta Cars, a division of Tecnoidea SAPI de CV, an engineering and design house based in Mexico City. The typical buyer will be a speed lover who has access to local raceways — and who has about $58,000 to spare.

"On the track, it's a giant killer," Capin said. "You can race against really high-end sports cars, Porsches and Corvettes, because of the power-to-weight ratio and the way the cars are set up. On the track, they are highly competitive against those cars at a fraction of the price."

But whether a small company can realize its dreams of becoming what one auto analyst called the "Mexican Lotus" is a different matter.

Few doubt Mexico's broader automotive capabilities. Mexico is the world's 10 biggest auto manufacturer, after China, Japan, the United States, Germany, South Korea, Brazil, India, France and Spain, in that order. Factories in Mexico pump out more than 2 million units a year.

The auto industry is Mexico's largest manufacturing sector and it employs some 560,000 people.

Volkswagen, Nissan, Ford, General Motors and many other global automakers have major operations in Mexico, and hundreds of companies supply them with components, from engine parts to bearings and moldings.

The cluster of associated industries is partly why Carlos and Daniel Mastretta thought they could make a go of it producing hand-built sports cars. Some 65 percent of the 1,900 components that go into the Mastretta MXT are available regionally, and the high labor costs of a hand-built car give them an edge in Mexico, where wages are low.

The Mastrettas have spent two decades designing public transportation vehicles for the likes of Mercedes-Benz and Volvo, and prototype racecars. The government holds a small stake in the company, hoping to boost such innovation.

Business experts give the Mastrettas only a fighting chance to survive on a small scale, even though they set fairly modest production goals: 25 to 30 cars this year, 120 to 150 units in 2012, and 250 or so the year after that.

"It's possible they can thrive as a niche market," said Tapen Sinha, a supply chain expert and professor at the Autonomous Technological Institute of Mexico. "But if you ask me if they'll produce 5,000 cars, I don't think so."

Still, Sinha said outsiders shouldn't scoff at Mexico's improving industrial and technological abilities even if most plants were enmeshed in global supply chains.

"There are pockets of very deep knowledge. Mexico is already the No. 1 producer of plasma TVs," he said, and it excels in areas such as logistics for mass production.

The Mastretta plant has only 41 employees. In one area of the warehouse, workers sand fiberglass bodies, each of which is laid on a hand-built chassis of laser-cut aluminum parts and carbon fiber panels bonded with aerospace-quality adhesives.

It takes about 300 hours of labor to put together a Mastretta MTX, Capin said.

Weighing in at barely 2,000 pounds, the car will be a lightweight back-to-basics vehicle. It has some amenities, such as GPS, air conditioning, power windows and iPod connectivity, but G-force cornering and road performance trump technological gadgetry.

"We're a small company. We don't have millions of dollars to spend on security features and traction control systems and air bags," Capin said.

Instead, buyers get manual five-speed cars, with 250-horsepower turbocharged Duratec engines made by Ford, that reach a maximum speed of 149 mph. A Corvette has a much bigger engine, but it also weighs 1,200 pounds more.

Many Mexicans think that the success of the Mastretta MXT will underscore the progress their nation has achieved in engineering and vehicle design, and also Mexico's importance in the global automotive industry.

"We have been proving a lot of stereotypes wrong: that in Mexico you can't build a sports car. We're showing that you can," Capin said.

Some car aficionados have doubts. On the BBC's highly popular "Top Gear" television show in late January, commentator Richard Hammond said autos reflected national characteristics as he reached into some ugly stereotypes about Mexico.

"Mexican cars (are) just going to be lazy, feckless, flatulent, overweight, leaning against a fence asleep, looking at cactus," Hammond said to the laughter of other commentators, one of whom suggested the MXT should be called a "tortilla."

Mexico's ambassador to London, Eduardo Medina Mora, fired off a blistering public letter to the BBC saying the program resorted to "outrageous, vulgar and inexcusable insults to stir bigoted feelings against the Mexican people."

A producer of "Top Gear" offered the ambassador an apology in a letter but noted that jokes about national stereotypes were integral to British humor.

"Our own comedians make jokes about the British being terrible cooks and terrible romantics, and we in turn make jokes about the Italians being disorganized and over dramatic; the French being arrogant and the Germans being over organized," a BBC statement quoting the letter said.

Seven months later, executives at Mastretta Cars were looking on the bright side, saying that the fracas, which was on the front pages of major newspapers in Mexico, gave the company a jolt of publicity.

For now, Mastretta MXTs will sell in Mexico, Europe and the Middle East. Strict U.S. laws on emissions and safety must still be cleared, including regulations to make the vehicle street legal in different states, Capin said. But that day will come.

"We have a natural market with the Mexican-American community in the U.S. It's a great thing for them to buy a Mexican sports car," he said.

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McClatchy Newspapers 2011

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