Japanese suppliers expand production in Mexico and Brazil

Increased capacity spurred on by the demands of OEM customers

2013/06/07

Summary
Building production sites in Mexico: F-Tech, Keihin, KYB, Koito, NHK Spring, NSK, Furukawa Electric, Mitsubishi Electric, U-Shin, Yutaka Giken launch operation
Strengthening production capacity in Mexico and business structure: Kasai Kogyo, Kiriu, Sanoh Industrial, Jatco, TS Tech, Denso, Toyota Tsusho, Nippon Kayaku, Hi-Lex, Yorozu
Establishing production sites in Brazil: Kinugawa Rubber, Nippon Steel & Sumitomo Metal, Sumitomo Rubbers, TACHI-S, Tokai Rubber, Toyoda Gosei, Nitto Denko, Mitsubishi Chemical, Unipres, Yorozu

Summary

The 2012 vehicle production volume in Mexico increased by 18% to 3.02 million units y/y exceeding a volume of three million units for the first time. With the sales volume increasing by 9.4% to 1.03 million units and the exported volume increasing by 9.9% to 2.36 million units (excluding heavy-duty buses and trucks), both in-country and overseas demands show signs of improvements. Under the circumstances, Japanese automakers are constructing new plants; increasing the estimated total production capacity from 700,000 units in 2012 to over 1.2 million units in 2014. For example, in 2012, Ford expanded its existing automobile plant and GM constructed a new transmission plant and both automakers started production of new models. (click on the linked map ion the right for details).

The Japanese suppliers are responding to the activities of these OEMs by entering the Mexican market and making investments to expand production capacity. The products are delivered to different automakers, not targeted at just one company.

The 2012 sales volume in Brazil increased by 4.7% to 3.8 million units, but the production volume decreased by1.9% to 3.34 million units along with a decrease in imported vehicles. The Brazilian government decided to reduce industrial product taxes on automobiles to OEMs under the new automobile policy, "Inovar-Auto", issued in October 2012 for spurring local production and advancing auto-related industry in Brazil. Currently, all Japanese, European, and U.S. OEMs with local production bases in Brazil have been granted the tax reduction privilege.

A large portion of investments by Japanese automakers were made for starting new businesses in Brazil.

The following will report on the activities of Japanese suppliers in Mexico and Brazil (the report includes activities up to the mid-May 2013 in the span of nine months).

Construction of new plants in Mexico

Plan for delivery to several Japanese OEMs	Koito, Tsubakimoto Chain, NSK, Furukawa Electric, Mitsubishi Electric
Plan for delivery to European/American OEMs	For VW group: Keihin, Yorozu,U-Shin; for GM: F-Tech

To Improve production capacity and strengthen business structure in Mexico

To meet production increase demand at Nissan	Kasai Kogyo, Jatco, and TACHI-S
Delivery to several Japanese OEMs	Tokai Rubber, Nishikawa Rubber, and Nihon Plast
To Place Mexico as the supply hub across North America	Kiriu, Showa, TS Tech, NSK, Hitachi Chemical
Establishment of new business hubs	R&D site: Nippon Kayaku; new company for merged business: TS Tech ; Sales company: Stanley Electric

New business developments in Brazil

To meet increased production capability demand at Japanese OEMs	Calsonic Kansei, TACHI-S, Toyoda Gosei, Yorozu
Delivery consideration to European OEMs	Kinugawa Rubber, Koito, Sumitomo Rubbers, Unipres
Plan for expansion into other type of business	Nippon Steel & Sumitomo Metal, Nitto Denko

Related Reports: Japanese suppliers

Thailand (Apr. 2013), ASEAN (Mar. 2013), Russia and Eastern Europe (Jan. 2013), India (Nov. 2012),
Mexico and Brazil (Oct. 2012), Central & Southwestern China (Aug. 2012), Southern China (Aug. 2012),
Eastern China (Jul. 2012), Northern and Northeastern China (Jul. 2012), US (Aug. 2012),

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