Japanese parts suppliers in Mexico and Brazil: Companies continue to increase capacity

Downturn in Brazil reduces number of new businesses



  In 2016 3.466 million vehicles were manufactured in Mexico (excluding large buses and trucks) (year-over-year (y/y) growth of 2.0%), 2.768 million vehicles were exported (y/y growth of 0.3%), and 1.604 million new vehicles were sold for record breaking y/y growth of 18.6%. Between January and May 2017, 1.55 million vehicles were manufactured (y/y growth of 14.4%), 1.237 million vehicles exported (y/y growth of 14.5%), and 616,000 new vehicles sold (y/y growth of 4.8%), with exports leading the market.

  While production expansion continues in Mexico, U.S. President Trump indicated that the U.S. will leave or renegotiate the terms of the North American Free Trade Agreement (NAFTA). President Trump announced his request for Ford to terminate construction of a new passenger vehicle plant in Mexico, creating much anxiety for the future. However, it has also been reported that other Japanese, U.S., and E.U. OEMs will not change their business plans in Mexico.

  • Toyota has made no changes to its 2019 operation plans for its passenger vehicle plant.
  • Honda, VW, and the Renault/Nissan Alliance announced they would continue investing in local plants.
  • Audi’s new plant in Puebla came on stream in 2017. The OEM also announced it will continue making investments.
  • BMW began preparations at the site for its plant in San Luis Potosi that is scheduled to come on stream in 2019.
  • GM is planning to invest in expansions for its Guanajuato plant.
  • FCA is increasing production of Jeep brand vehicles for export.
  • Ford’s plants for transmissions and engines came on stream in 2017.

  Meanwhile, Japanese parts manufacturers are growing wary and becoming more deliberate in forecasting future outcomes. However, as of this writing there has been little change to the various companies’ business plans in Mexico, and many Japanese parts manufacturers are increasing production capacity to accommodate an increase in orders or expand business. New companies are also entering the region, with investments being made to add production items to their lineup.

  In Brazil, 2016 saw production of 2.157 million vehicles including trucks and buses (but excluding CKD vehicles) for a y/y decrease of 11.2%. 2.05 million new vehicles were registered for a y/y decrease of 20.2%. However, exports increased 24.7% to 520,000 vehicles. Between January and May 2017, 1.037 million vehicles were manufactured (excluding CKD vehicles) for a y/y increase of 23.4%, 824,000 new vehicles were registered for a y/y increase of 1.6%, and 308,000 vehicles were exported for a y/y increase of 61.8%.

  As the domestic market is shrinking, there are few new business expansions being carried out by Japanese parts manufacturers. However, large-scale investments are being made for the expansion of South American operations by companies such as Koito Manufacturing, which is investing roughly JPY 8 billion in the construction of a new plant, and Sumitomo Rubber, which is investing JPY 5.6 billion in new production equipment.

  This report will cover recent trends among Japanese parts manufacturers in Mexico and Brazil for the year leading up to May 2017.

Thailand Map
(Please click the map for OEM plant locations.)
(Please click the map for OEM plant locations.)

New plants in Mexico, production items are in parentheses

New plants Iriso Electronics (connectors), AGC (glass), FTS (plastic fuel tanks), NTN (drive shafts) Kobe Steel (cold heading wire), JFE (zinc-plated steel plates), Shimizu Industrial (engine parts, etc.), Sumitomo Riko (anti-vibration rubber), Daido DMS (mold components), Central Motor Wheel (aluminum wheels), Topy Industries (fasteners), NSK (products for automatic transmissions), Pioneer (audio products), Mabuchi Motor (motors for electronics), Mino Industry (aluminum die-cast parts), Mitsubishi Steel Manufacturing (suspension springs), Moriroku Technology (interior parts)
Cancellation of new plant construction Nisshinbo Holdings (company goes back to the drawing for board for its construction of a new plant: brake friction materials)

Expansion of production capacity in Mexico, production items are in parentheses, items with an asterisk are new

Consolidating production in Mexico (from the U.S.) Akebono Brake (drum brakes)
Considering transfer of production from Mexico to the US Nidec (electric power steering (EPS) motors)
Putting plans to increase production capacity on hold Koito Manufacturing (deferring plant expansion for headlamps)
Expansion of facilities Suncall (*valve spring wire material for engine valves), Shimizu Industrial (engine parts/electrical components, etc.), Seiren (synthetic seat leathers), Daido Metal (engine bearings), Tsubakimoto Chain (*transfer case chains for four-wheel-drive vehicles), Hanwa (coil centers), Yorozu (pressed parts) Nidec (electric power steering (EPS) motors), Musashi Seimitsu Industry (*planetary gears for automatic transmissions), Molitec Steel (*clutch drums for automatic transmissions), Riken (*engine piston rings)
Plant expansion Kitagawa Iron Works (new building: transmission parts), Toyoda Gosei (expansion of equipment and facilities: weatherstrips), Nishikawa Rubber (third building: sealing materials), Nihon Plast (building expansion: plastic parts)
New facility/New plant Ashimori Industry (second plant: safety components), Kasai Kogyo (third plant: molded headliners, etc.), Sumitomo Riko (second plant: anti-vibration rubber), Tensho Electric Industries (second plant: plastic molded parts), Tokyo Roki (wholly owned new plant: catalyst), Toray (new facility: *airbag base fabrics), Japan Vilene Company (new facility: *headliner upholstery materials), Furukawa Electric (second plant: wire harnesses)
Strengthening research and development and sales Tachi-S (crash test equipment implementation: seats), Bando Chemical Industries (establishment of a sales network: belt-related products)

Business development in Brazil, production items are in parentheses, items with an asterisk are new

New plants constructed/on stream Koito Manufacturing (establishment of new plant: headlamps, rear lamps), Toyoda Gosei (operating friction materials plant), Nisshinbo Holdings (establishment of new plant and equipment transfer from existing plant: friction materials)
Increasing production capacity Sumitomo Rubber (*new production equipment for truck/bus tires), Hi-Lex (window regulators)


Related Reports:
LMCA Client Alert: Trump Trade Policy - Potential Vehicle Assembly Exposure and Risk in North America (Jan. 2017)
Ford: New plant in Mexico cancelled; existing Mexican plant to make next-generation Focus (Jan. 2017)
Mexico: Toyota to join Audi, Kia, BMW and Nissan/Daimler in building new plants (Nov. 2015)

Japanese Supplier Reports:

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