Mexico: Toyota to join Audi, Kia, BMW and Nissan/Daimler in building new plants

Production reaches 3.2 million units in 2014, expected to rise to 5 million by 2020

2015/11/16

Summary

Mexican light vehicle production and exports
Growing importance of Mexico as production and export hub

 Mexico's close proximity to the huge U.S. market, low labor costs, and free trade agreements with 45 nations and regions have made the country an important production and export hub for Japanese, American and European OEMs. Since Mexico also has joined the Trans-Pacific Partnership (TPP) Agreement reached in October 2015, the OEMs most likely will place even greater importance on Mexico in their business plans. In 2014, Mexican light-vehicle production reached 3.22 million units, which is the world's seventh highest, surpassing that of Brazil. Meanwhile, Mexico was ranked as the fourth-largest light-vehicle exporter, after Germany, Japan and Korea.

Record production and exports for January-September 2015

 According to AMIA's data, from January to September 2015 light-vehicle production increased by 6.5% year-over-year (y/y) to 2.55 million units and exports grew 6.7% y/y to 2.08 million units, setting record highs for the period. Mexican exports to the U.S. and Canada accounted for 82.3% of total exports. AMIA President Eduardo Solis forecasted that Mexican output is expected to reach 4 million units in 2017 and exceed 5 million units by 2020.

OEMs raising production capacities and building new plants

 General Motors Company, LLC has a plan to invest USD 5 billion between 2013 and 2018 to renovate and expand its existing four plants. Ford Motor Company is slated to spend USD 2.5 billion to either build new, or expand existing, engine and transmission plants. Also, VW AG announced that it would invest USD 1 billion to expand its existing plant and renew its facilities. (Although the VW Group's plans could likely change due to its emissions scandal, this report outlines the plans released by the Group so far.) As for new production plants for finished vehicles, Audi AG of the VW Group and Kia Motors of the Hyundai Motor Group are scheduled to start operations at their respective plants in 2016. Nissan Motor Co., Ltd. and Daimler AG are expected to produce premium compact vehicles at their new joint-venture plant, starting in 2017. Bayerische Motoren Werke AG (BMW) and Toyota Motor Corporation will open their own new plants in 2019.

Sales of light vehicles reach a record-breaking 945,000 units for January-September period of 2015

 Sales in the Mexican market, compared to the significant growth seen in both production and exports, were depressed. However, light-vehicle sales reached a record 945,000 units, up 19.7% y/y, for the January-September period of 2015, recovering to the level achieved before the global economic crisis. The greater use of loans, price controls, and limits placed on the number of used-cars imported from the U.S. are all seen as factors triggering growth in new-vehicle sales in Mexico.

 LMC Automotive projected in its forecast released in the third Quarter of 2015, that Mexican light-vehicle sales for 2015 will increase by 17.9% y/y to 1.3 million units. Sales in the country will grow by 1.1-2.0% from 2016 to 2018, reaching 1.4 million units in 2018.

Related Reports:
Japanese suppliers in Mexico: Development of new manufacturing facilities (Jun. 2015)
Japanese suppliers in Mexico and Brazil: New expansions and plants (Jul. 2015)