Japanese suppliers in Mexico: Response to increasing orders for EV materials, etc.

With the USMCA coming into effect, production systems will continue to be strengthened

2021/07/28

Summary

Map of automotive plants in Mexico (Click to see a map of facilities)

  According to the Mexican Automobile Manufacturers Association (AMIA)/National Institute of Statistics and Geography (INEGI), vehicle production (excluding heavy-duty trucks and buses) were 3,381,068 units in 2019 and 3,041,178 units in 2020 (down 20.2% year-over-year(y/y)), while exports were 3,338,305 units in 2019 and 2,681,806 in 2020 (down 20.9% y/y). Mexico domestic sales volume was 1,317,732 units in 2019 and 949,121 units in 2020 (down 28.0% y/y), marking the fourth consecutive year of decline.

  In 2020, in response to the COVID-19 pandemic, all automakers sequentially suspended operations after March, and most plants were not able to resume operations until the end of May. In addition, export volumes declined due to the impact of the global economic slowdown.
 In the January-June period of 2021, production volume has been recovering, up 31.8% y/y to 1,595,701 units, exports up 33.5% to 1,404,637 units, and domestic sales up 18.1% to 515,401 units.

  The USMCA (United States-Mexico-Canada Agreement) came into effect on July 1, 2020, and while it retains many of the mechanisms of the NAFTA (North America Free Trade Agreement), it adds items that aim to return production to the U.S., and there are concerns about the impact on automobile production in Mexico. However, automakers are strengthening their production systems and adjusting production schedules in Mexico.
  General Motors Company (GM) will invest more than USD 1 billion to remodel its Ramos Arizpe Plant for EV production in Mexico. The company also plans to begin production of a Honda-branded electric SUV in 2023.
  FCA (Stellantis N.V.) plans to continue production in Mexico of the Ram heavy-duty pickup, which was planned to be transferred to the U.S. in 2018, following the USMCA agreement.
  Toyota Motor Corporation (Toyota) started full-scale operations at its new Guanajuato Plant in February 2020. To transfer the production of the Tacoma medium-duty pickup truck, which is being produced at the plant in Texas, USA, to the new plant, the company aims to achieve full production capacity of 100,000 units per year by 2021. Together with the plant in Baja California, which already produces the Tacoma, the annual production volume will be increased to 266,000 units.
  Nissan Motor Co., Ltd. (Nissan) started production of the new Versa and the new Sentra at Aguascalientes plants No. 1 and No. 2 and the Cuernavaca Plant one after another in 2019. The company also invested over USD 600 million to refresh five models. COMPAS (Cooperation Manufacturing Plant Aguascalientes), a joint venture plant between Nissan and Daimler, started operations in 2019 to intensively produce the Daimler-branded GLB compact SUV. In 2020, the company began production of the QX55, a 2021 compact crossover SUV for the Infiniti brand.
  Honda has been reorganizing its production system at its Mexican plants since 2020 to improve the profitability of its automobile business. Production of the HR-V at the Guadalajara Plant was abandoned, and four-wheel vehicle production was consolidated to the Celaya Plant. In addition, the company ended the production of the Fit at the Celaya Plant by the end of 2020 and consolidated its production capacity to the HR-V.

  Japanese auto parts suppliers are expanding their production capacity in anticipation of increased orders in the future. Conversely, some suppliers are modifying their business structures in response to the market downturn. Among the supplier newcomers, the steel sheet plants of JFE Steel Corporation and JFE Shoji Corporation, and the automotive connector plant of Iriso Electronics Co., Ltd. are in operation. In terms of production capacity expansion, Toyoda Gosei Co., Ltd. will build its second new airbag bag plant, and Sumitomo Heavy Industries, Ltd. will build its fourth new small reduction gear plant. In addition, F-Tech Inc. expanded its plant due to new orders for undercarriage parts for EVs. Nidec Corporation is planning to expand its plant to start production of drive motors for EVs. Conversely, as for the review of business structures, Nippon Seiki Co., Ltd. merged its three Mexican subsidiaries in the field of instrument parts, and Metal One Corporation integrated its three subsidiaries in the field of steel sheet processing, all of which are moves to strengthen their competitiveness.

  The following are the recent trends of Japanese parts suppliers in Mexico (the data covers about two and a half years until mid-June 2021).

 

Establishment of new plants in Mexico, ( ) denotes production items

New plants Iriso Electronics Co., Ltd. (automotive connectors), Sankyo Seiki Industry Co., Ltd. (automotive springs), JFE Steel (hot-dip galvanized steel sheets), JFE Shoji (processing and sales of high-tensile steel sheets), Piolax Inc. (considering construction of a plant: fuel tank parts to meet environmental regulations)

 

Expansion of production capacity in Mexico, ( ) denotes production items, etc., * denotes introduction of new products

Transfer of production, etc. from the U.S. to Mexico Advanex Inc. (consolidation of production in Mexico: precision springs with low price competitiveness), Nitto Denko Corporation (transfer of its production items among its operations in the U.S., Mexico, and Brazil: various tapes for automobiles), Mitsubishi Steel Manufacturing Co., Ltd. (transfer of production to Mexico: stabilizers)
Production transferred from China to Mexico Clarion Co., Ltd. - Faurecia Clarion Electronics (navigation systems), SIIX Corporation (automotive EMS products for the U.S. market)
Facility expansion Gohsyu Corporation (expansion of facilities: * transmission parts for hybrid vehicles), Tachi-S Co., Ltd. (expansion of facilities: seat components), Japan Aviation Electronics Industry, Ltd. (establishment of mass production system: squib-connectors for airbags), NGK Spark Plug Co., Ltd. (production preparation at existing plants: *knock sensors), Mitsui Kinzoku ACT Corporation (expansion of production lines: to produce all side door latches for the U.S. Market), Unipres Corporation (installation of one production line: *hot stamping)
Plant expansion F-Tech (plant expansion: undercarriage parts, new orders for EVs), Shinano Kenshi Co. Ltd. (plant expansion: precision motors for automobiles), Nichirin Co., Ltd. (plant expansion: air conditioner hose, etc.), Nidec (plant expansion: * drive motors for EVs), Moriroku Technology Co., Ltd. (building expansion: interior parts outlets)
New plant construction Sumitomo Heavy Industries, Ltd. (construction of fourth plant: small reduction gears), Toyota Gosei Co., Ltd. (construction of second plant: airbag bags)
Strengthening of business and sales structures, establishment of technical centers, company liquidation Janome Corporation (sales subsidiary established: electronic devices and components), Shinwa Co., Ltd. (sales base established: CASE-related products), Nippon Seiki Co., Ltd. (three subsidiaries merged in Mexico: instrument components), Patlite Corporation (establishment of sales subsidiary: laminated signal lights, etc.), Fuji Press Co., Ltd. (dissolution of joint venture to form a new company: pressed parts), Bridgestone Corporation (liquidation of subsidiary: urethane foam for automobiles), Mitsubishi Materials Corporation (establishment of technical center: machining process technology), Metal One (integration of three subsidiaries: steel sheet processing).
Business acquisition of local companies Sojitz Corporation (business succession of a local company: automobile self-financing), Noritake Co., Ltd. (acquisition of a local manufacturer: industrial whetstones)

 

Related Reports:
OEM Operations in the U.S. in 2020 (Dec. 2020)
Start of USMCA and Mexican automobile industry trends (Jul. 2020)
Mexico shifting production of compact cars to SUVs/pickups to meet the US demand (Apr. 2019)

Overseas business activities of Japanese suppliers:
Japanese suppliers in the U.S. and Canada: Increasing facilities for electrification (Apr. 2021)
Japanese suppliers in Central and Eastern Europe: Meeting demand with new plants and acquisitions (Dec. 2020)
Japanese suppliers in China: Strengthening production and development of parts for NEVs (Oct. 2020)
Japanese Suppliers in East China: Increasing Capacity for NEV Market (Sep. 2020)
Japanese suppliers in ASEAN: Components and materials for electrification on the rise (Aug. 2020)
Japanese suppliers in Western Europe: Responding to advancements in CASE technologies (Apr. 2020)
Japanese suppliers in India: Responding to stricter emission regulations and EV policy (Nov. 2019)
Japanese Suppliers in Mexico: Focusing on Changes to NAFTA (Oct. 2018)