Japanese suppliers in Mexico and Brazil: speeding up plant construction

Akebono Brake, Asahi Glass, Koito, Nippon Steel, Tachi-S, and Denso

2012/10/02

Summary

Thailand Map The auto market in Mexico grew rapidly with an increase of 10.4% y/y to 906K units in 2011. It is expected that the market volume will reach one million units again within a few years. The production volume for 2011 was 2.56 million units; showing that the majority of the production was exported. Expected growth for both export and in-country demands are driving Japanese OEMs to enhance their production capacities.

 Nissan's two existing plants are already working in their full production capacities (annual production capacity of 600K units). Its production result for 2011 was 607K units. Currently, a third plant with an annual production capacity of 175K units is under construction in Aguascalientes. The operation is planned to begin in late 2013. Honda produces 60K CRVs annually at its existing plant, but plans to add 200K units with the construction of its second plant in Guanajuato. The plant will begin production of compact cars in the spring of 2014. Mazda is building a new plant with an annual production volume of 140K units in Guanajuato State, with a plan to start operation within FY2013.

 In response to these activities by the OEMs, Japanese suppliers are actively constructing new plants and expanding their existing plants in the Mexican Plateau including Guanajuato, Aguascalientes, and San Luis Potosi.


 The Brazilian auto market grew 3.4% y/y to 3,633K units in 2011, which was ranked at number four in the world after China, the U.S., and Japan. The market is expected to show further growth with the upcoming 2014 FIFA World Cup and the 2016 Summer Olympic Games hosted by Brazil. Japanese OEMs, like Toyota and Nissan, are constructing new plants and launching strategic cars for emerging countries.

 Toyota will start production of its strategic compact car, the Etios, from September 2012 at its new third production plant in Sorocaba, Sao Paulo with an annual production capacity of 70K units. A new engine production plant will begin production in 2015. Nissan builds cars in the Renault-Nissan Alliance plant, but will construct a new, solely owned plant set to begin production earlier than the originally planned first half of 2014.

 In response, Japanese suppliers are making their entries into the Brazilian market or expanding their production capacities and business areas. Because Toyota and Nissan only have a small share in the Brazilian market, some suppliers are aiming at beginning transactions with European OEMs.

 The following will report on the activities of Japanese suppliers in Mexico and Brazil (the report includes activities up to the end of August 2012 in the span of eight months).

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