Mumbai: The country’s largest auto maker Tata Motors Ltd is likely to set up a 1,200 crore factory in Mexico this year in a bid to sell its vehicles in South America, said five people familiar with the development.

The plant will churn out 100,000 cars a year, assembling models such as the Nano, Indica Vista and Indigo Manza to be sold in Mexico, Brazil and Argentina, among other countries. The capacity may later be ramped up to 300,000 cars, one of them added. All the people declined to be named.

Also Read Tata Motors may take Mexico road to North America

Debasis Ray, a spokesperson for Tata Motors, in an emailed reply said the company has not arrived at a decision regarding the Mexico project.

“Given its wide product portfolio and its objective to expand its international business, Tata Motors continuously explores both what could be relevant markets and, within them, relevant business opportunities," he said.

New opportunity: The Nano being test-driven for a commercial shoot. Ramesh Pathania / Mint

On 18 May, Mint had reported that Tata Motors may take the Mexico route to enter the North American market.

The company has floated requests for quotation to auto component makers such as Compania Hulera Tornel SA De CV Tornel, the Mexican subsidiary of JK Tyres Ltd.

“We have received an enquiry from Tata Motors, and we are assessing their requirement," said Sanjay Sharma, spokesman at JK Tyres. “Only after evaluation, we’ll respond to the client and take it forward."

Tornel has three factories in Mexico with a combined capacity of making 6.6 million tyres a year, according to the annual report of JK Tyres, which acquired the Mexican company last fiscal.

The head of automotive practice at a global consultancy said the whole of South America is a major target for Indian auto makers such as Tata Motors. With trade regulations being tough in Brazil, Mexico offers them an attractive route.

“Fruition of plans has become a bit of a nightmare in a country like Brazil, " he said, requesting anonymity. “Having a manufacturing base in Mexico is like hitting two birds with a stone. Not only does it give access to the entire South American market, but also offers an opportunity to address North America."

After successfully steering its UK subsidiary Jaguar Land Rover out of crisis, Tata Motors is now focusing on creating a local presence in key emerging markets worldwide.

“Our view now is to put more emphasis on being more locally present in the important market," Carl-Peter Forster, group chief executive at Tata Motors, said in a media interaction last Thursday.

He named Latin America among the markets the company is targeting. “The big step forward is to create local teams in these markets, which can then develop our business."

Forster said the company already has models that meet international requirements. The “foundation on the product-side has already been laid," he said.

In a recent portfolio reshuffle, S. Krishnan, senior vice-president (commercial) for the company’s passenger car business unit, was given the charge of Tata Motors’ international operations.

According to the people cited above, Krishnan will head Tata Motors’ Latin American operations, which includes Mexico.

Ray, the company spokesman, declined to confirm Krishnan’s new role, saying, “His mandate is specific to a region, but this information is internal to the company."

Tata Motors markets its commercial and passenger vehicles in many parts of Europe, Africa, West Asia, South-East Asia, South Asia and South America. The company is also present in the UK, South Korea and Spain through subsidiaries and associate companies.