Another indication of the complexity of the globalized auto industry came Monday with the news that Volkswagen is considering moving Passat production for the North American market to its facility in Mexico.

The reason for the move is currency issues, specifically a declining U.S. dollar and a strong euro. Coupled with inefficiencies in its German plants, including the Passat assembly plant, exchange rate problems have hampered VW's financial recovery in the North American market.

If it happens, the shift won't happen overnight - the plan would be to start producing Passats in Mexico by 2009. The reaction of German trade unions will be interesting, and the cynical among us might label this rumor as a company move to strengthen its bid for dramatic restructuring of its money-losing plants in western Germany, a move which is strongly opposed by the unions.

[Source: Reuters]