Automakers Daimler and Renault-Nissan say they will build a $1.36 billion plant to manufacture Infiniti and Mercedes-Benz brand compact vehicles.
The companies announced Friday that construction on the plant would begin in 2015 in the northern state of Aguascalientes.
They called it the most ambitious project to date for the joint venture the firms launched in 2010. They said it would produce as many as 300,000 cars a year, with Infiniti production beginning in 2017 and Mercedes in 2018.
The plant is expected to employ 5,700 people.
Automakers are increasingly moving car manufacturing to Mexico because of its access to the U.S., low labor costs and free-trade deals with more than 30 countries.