Mexico: production and export expect to reach new record highs in 2012

Nissan, Honda, Mazda, and Audi will each build new plants

2012/09/24

Summary

Exports of light vehicles from Mexico by destination Mexico is among the major production sites of vehicles in the Americas and is stepping up its presence as an export hub for not only North and South America but also countries worldwide.

 In 2011, Mexico produced a record high of 2.56 million vehicles and exported 2.14 million units, which was also a new record. In 2012, production and exports are expected to further increase by at least 8% year-on-year to hit new record highs (AMIA (ASOCIACION MEXICANA DE LA INDUSTRIA AUTOMOTRIZ), announced in July). Production volume is also estimated to grow to 3 million in 2015 and further to more than 4 million in 2017.

 Sales volume in Mexico was up by 10% year-on-year to 904,000 units in 2011, but grew at a sluggish pace and did not return to the level - more than 1 million - before the recession in 2008. The 2012 sales are estimated to be 900,000-1 million units.

 Mexico has a geographical advantage for exporting products to both North and South America and has concluded free trade agreements with 44 countries and already has a supply chain by suppliers, which increasingly attract new investment by OEMs.

 Among Japanese OEMs, Nissan, Honda, and Mazda will each build a new plant that is capable of producing 175,000, 200,000, and 140,000 units a year, respectively, in order to start operations in 2013-2014. Among European OEMs, Audi in the VW Group will build a new plant that is capable of producing 150,000 units a year, with plans to start operations in 2016.

 Since the beginning of 2012, a friction has developed between Mexico and two important export destinations, Brazil and Argentina, over the Auto Pact with Mexico; this may adversely affect production and export by each OEM in the future.



In 2011, Mexico produced a record number of 2.56 million units and exported a record high of 2.14 million units

 In Mexico, production of light vehicles (excluding medium-/heavy-duty commercial vehicles) in 2011 increased by 13.1% from 2010 to a record number of 2.56 million units; export grew by 15.3% to a record high of 2.14 million units. In 2011, 83.8% of the production was exported. In the January-July period of 2012, production also increased by 15.6% y/y while export grew by 13.6% y/y to register a new record number.

 In Mexico, sales of light vehicles in 2011 increased by 10.4% y/y to 904,000 units, but did not return to the 1 million-mark, the level before the recession in 2008. In the January-July period of 2012, sales grew by 11.8% y/y to 538,000 units.

Production, export and domestic sales of light vehicles in Mexico

(Units)
2007 2008 2009 2010 2011 Jan.-Jul.
2011
Jan.-Jul.
2012
Production 2,022,241 2,102,801 1,507,527 2,260,776 2,557,550 1,430,902 1,654,614
Export 1,613,313 1,661,619 1,223,333 1,859,517 2,143,879 1,216,975 1,382,770
Export/production 79.8% 79.0% 81.1% 82.3% 83.8% 85.0% 83.6%
Domestic sales 1,093,352 1,020,492 752,552 818,785 904,199 480,613 537,553
Source:  AMIA (Asociacion Mexicana de la Industria Automotriz) report for production and export, and Ward's Automotive Yearbook/Reports for domestic sales
(Notes) 1. The above data show total of light vehicles (passenger cars and light trucks) and exclude medium- and heavy-duty trucks and buses
2. Domestic sales include domestically-produced vehicles and imports.


 In Mexico, three US OEMs, three Japanese OEMs, and VW produced light vehicles. Chrysler, which merged its operations with Fiat, started production of Fiat models and export of Chrysler models to Brazil; in 2011, it increased production by about 30%. Nissan, which started production of the New Micra, boosted production by about 20% in 2011.

Production, export and domestic sales of light vehicles by OEM

(Units)
Production Export Domestic sales
2010 2011 2010/2011 2010 2011 2010 2011
GM 559,316 543,502 -2.8% 460,112 443,242 155,580 168,502
Ford 393,649 462,462 17.5% 384,959 449,925 87,533 86,323
Fiat-Chrysler 257,319 338,772 31.7% 224,078 323,096 81,076 84,682
VW 434,685 510,041 17.3% 350,721 429,987 129,483 153,004
Nissan 506,490 607,087 19.9% 344,246 411,661 207,564 247,872
Toyota 54,278 49,596 -8.6% 54,278 49,539 46,769 48,589
Honda 55,001 45,390 -17.5% 41,121 36,429 39,866 36,209
Others 38 700 70,914 79,018
Total 2,260,776 2,557,550 13.1% 1,859,515 2,143,879 818,785 904,199

Source: AMIA report for production and export, and Ward's Automotive Yearbook/Reports for domestic sales


 In 2011, Mexico exported 2.14 million units, of which about 70% was for North America - 1.36 million for the US and 160,000 for Canada. Exports to Latin America were up by 55.9% y/y to 320,000 units while exports to Europe were up by 23.9% to 220,000 units. In 2009, about 80% of the exports were for North America, but exports to Latin America, Europe and other regions have been increasing.

Exports of light vehicles from Mexico by destination

(Units)
2009 2010 2011 Jan.-Jul. 2011 Jan.-Jul. 2012
US 878,742 1,277,184 1,361,524 792,098 881,853
Canada 98,949 142,800 159,440 105,321 99,950
Latin America 104,073 206,468 321,863 168,665 225,968
Africa 0 9,494 8,012 4,634 13,002
Asia 12,333 29,050 25,538 13,925 21,164
Europe 126,515 178,221 220,788 112,337 120,071
Others 2,721 15,965 46,718 19,999 20,651
Total 1,223,333 1,859,182 2,143,883 1,216,979 1,382,659

Source: AMIA

 

 



Assembly plants of light vehicles by major OEMs

 The summary of assembly plants of eight major OEMs (including Mazda, which is currently planning production) that produce light vehicles in Mexico is shown in the table below.

 In the first half of 2012, production at GM's Ramos Arizpe plant fell by about 30% due to the termination of production of the HHR SUV and production at GM's Silao plant also declined slightly. On the other hand, production increased at all the plants of other OEMs. In particular, production remarkably increased at Fiat-Chrysler's Toluca plant, which started production of the Fiat 500, and at Nissan's Aguascalientes plant, which began producing the Micra compact car.

 Concerning the launch of future production models, GM will start production of the Trax compact SUV at the San Luis Potosi plant and a new full-size pickup at the Silao plant. Ford will produce new models of the Ford Fusion and the Lincoln MKZ at its Hermosillo plant. Fiat-Chrysler plans to produce a Fiat commercial van under the Ram brand at its Saltillo plant.

 With regard to new plants that will start operations in the future, Audi in the VW Group plans to produce the Q5 SUV starting in 2016. Nissan will begin producing a B-platform model at its new plant at the end of 2013, Honda the Fit compact car in the spring of 2014, and Mazda the Mazda2 and Mazda3 in the first quarter of 2014.

Assembly plants of light vehicles by major OEMs

OEM Plant Major production models Production volume (units)
2011 Jan.-Jun. 2011 Jan.-Jun. 2012
GM Ramos Arizpe Cadillac SRX, Chevrolet Captiva 195,606 109,920 77,915
Silao Chevrolet Silverado, GMC Sierra,
Cadillac Escalade,
Chevrolet new full-size pickup (planned)
280,112 145,046 136,434
San Luis Potosi Chevrolet Aveo, Trax (planned) 68,428 32,026 40,829
GM total 544,146 286,992 255,178
Ford Hermosillo Ford Fusion, Lincoln MKZ 329,509 164,745 169,014
Cuautitlan Ford Fiesta 125,971 61,364 70,205
Ford total 455,480 226,109 239,219
Fiat-Chrysler Saltillo Ram Pickup, commercial van (planned)
(based on the Fiat Ducato/Doblo)
132,818 69,840 86,615
Toluca Dodge Journey/Fiat Freemont, Fiat 500 198,765 86,982 137,574
Chrysler total 331,583 156,822 224,189
VW
(Audi)
Puebla VW Beetle/Cabrio, Bora, Jetta 510,041 244,849 278,026
San Jose Chiapa Audi Q5 (to be produced from 2016) Production capacity 150K/year
VW total 510,041 244,849 278,026
Nissan Aguascalientes Nissan Sentra, Versa, Tiida,
Micra (March in Japan)
360,129 165,795 204,779
Cuernavaca Nissan Tsuru, NV200, NP300,
Frontier, Pickup, chassis
246,958 122,512 146,536
Third plant
(Aguascalientes)
B-platform model
(to be produced from the end of 2013)
Production capacity
(first stage) 175K/year→
(mid-range target) 200K/year
Nissan total 607,087 288,307 351,315
Toyota Tijuana Toyota Tacoma 49,596 22,489 28,329
Honda El Salto Honda CR-V 45,426 21,433 31,334
Celaya Honda Fit
(to be produced from the spring of 2014)
Production capacity 200K/year
Honda total 45426 21,433 31,334
Mazda Salamanca Mazda2 (Demo in Japan),
Mazda3 (Axel in Japan)
(to be produced from Q1 2014)
Production capacity 140K/year
Source: Ward's Automotive Yearbook, Ward's Automotive Report
(Notes) 1. The above production results by Ward's do not correspond to the data released by AMIA.
2. Besides the above eight OEMs, Isuzu, Hino, Daimler, Volvo Trucks, Scania, MAN, Paccar and Navistar produce medium- to heavy-duty commercial vehicles. Their production amounted to 128 K units in 2011.

 

 



Detroit Three: Activities by GM, Ford, and Fiat-Chrysler

GM produces Trax compact SUV at the San Luis Potosi plant and a new full-size pickup at the Silao plant

 In July 2012, GM announced that it would invest USD120 million in its San Luis Potosi plant in order to produce Chevrolet Trax - a compact crossover SUV. The Trax is a global model that GM Korea, which is in charge of the development of GM's compact cars, developed by using the platform of the Aveo (Sonic) compact sedan. After it is unveiled at the Paris Motor Show in September, the model will be introduced in Mexico in the fourth quarter of 2012. GM plans to market the model in more than 140 countries worldwide, but plans not to sell it in the US as the model would compete with the same size SUV - Chevrolet Equinox.
 GM will also invest USD200 million in the Silao plant, planning to produce Chevrolet's new full-size pickup model. Production is scheduled to begin in 2013.

 

Ford invests USD1.3 billion in the Hermosillo plant to produce the New Fusion

 In March 2012, Ford announced that it would invest USD1.3 billion in its Hermosillo plant in Mexico. It will upgrade the plant in order to respond to the growing demand for midsize sedans in North America and will produce new models of Ford Fusion and its sister model, Lincoln MKZ. With this move, Ford will employ 1,000 new workers. The New Fusion is scheduled to be launched in North America in the fall of 2012. The new MKZ is an important model for the revitalization of the Lincoln brand and is among the seven new models under the Lincoln brand, which Ford will introduce by 2015.

 

Fiat-Chrysler makes the Saltillo plant into a core production facility of light commercial vehicles in North America

 In January 2012, Fiat-Chrysler's CEO, Sergio Marchionne, announced a plan to expand its Saltillo plant in Mexico as a core production facility for light commercial vehicles in North America. The plant plans to produce Ram's commercial vans that are based on the Fiat Ducato/Doblo in the future. The Fiat Ducato will be launched in 2013 as Ram's full-size commercial van to compete with the Ford Transit. The Fiat Doblo will be introduced as Ram's light commercial van in 2014MY to compete with the Ford Transit Connect.

Fiat-Chrysler markets Chrysler models under Fiat brand in Brazil

 In April 2011, Fiat-Chrysler decided that it would sell Chrysler models under the Fiat brand at more than 90% of Fiat dealers (about 550) in Brazil (there are 35 Chrysler dealers in Brazil). In August of the same year, Fiat began marketing of the Fiat Freemont (based on the Dodge Journey) in Brazil, which is produced in Mexico. This is a move to meet the requirement (marketing of Chrysler models in Brazil and Europe) by the US government for Fiat raising its stake in Chrysler.

 

 



European OEMs: Audi will build its first plant in North America in Mexico while BMW is considering the construction of a plant in Mexico

Audi to build a new plant in Mexico, planning to produce the Q5 SUV starting in 2016

 In April 2012, Audi announced that it would build its first plant in North America in Mexico. According to the announcement in September, Audi will begin construction of a new plant in San Jose Chiapa, Puebla, which is in the vicinity of VW's existing plant, in the middle of 2013, planning to produce a new model of the Q5 SUV starting in 2016. The production capacity is 150,000 units/year. Audi targets to sell 2 million units worldwide by 2020 and to sell 200,000 units in the US by 2018. Audi will supply products from its plant in Mexico to the US and countries worldwide in order to boost sales.

 

BMW considers the construction of a new plant in Mexico

 BMW is currently considering the construction of a new plant in Mexico (reported in August 2012). It expects to produce the 3 Series starting at the end of 2016 or the beginning of 2017. It is also considering production of a new model of a front-wheel-drive car including the new 1 Series, which is scheduled to be launched in 2017. BMW aims to have production capacity for 100,000-150,000 units/year and will have an initial production capacity of 40,000-50,000 units/year. M-Benz will begin production of the C-Class at its plant in the US starting in 2014; BMW says that it will set a price for the 3 Series that enables the model to compete with the C-Class by producing it in Mexico.

 

 



Japanese OEMs: Nissan, Honda, and Mazda will each build new plants

Nissan to construct its third plant in Mexico, producing a B-platform model starting at the end of 2013

 Nissan will invest USD2 billion to construct its third plant in Aguascalientes State (a second plant within the State). The construction began in July 2012 and the first stage construction is scheduled to be completed by the end of 2013 to start operations. In the first stage construction, the plant will have a production capacity of 175,000 units/year. It will produce a B-platform model for Mexico and overseas markets. With this new plant, Nissan expects to employ 3,000 employees directly and also 9,000 workers indirectly. Nissan's two existing plants currently have a production capacity of 600,000/year, and after the operations of the third plants begin, Nissan will increase its production capacity in the medium run to 800,000 units/year and then to more than 1 million units/year in the future. It is reported that Nissan plans joint production with Daimler, with which it is currently forming a capital and business alliance.

Nissan boosts the financial amount of parts procurement in Mexico, enhancing its sales network

 Nissan unveiled its plan to increase the financial amount of parts procurement in Mexico by three times from the current level by the end of 2013 (May 2012). It intends to further boost the local-content ratio from the current 80%.
 Nissan will invest USD125 million by 2013 to enhance its sales network (May 2012). Currently, it has 127 dealers and 229 sales bases and will add 48 dealers. It will thoroughly upgrade 87 sales bases. Nissan currently has about a 25% share of the market in Mexico, the largest there, and intends to further increase its marketshare. It will launch six models including the Altima in 2012, aiming to boost sales by providing products that cover 95% of the segments in the entire market.

Nissan starts production of the New Sentra at its Aguascalientes plant

 Nissan will invest USD150 million in its Aguascalientes plant and began production of a new model of the Sentra compact sedan in September 2012. The Sentra is expected to account for 50% of the production volume (about 360,000 units in 2011) at the plant. The new model has a stylish design and has a wider interior than the former model, improving fuel efficiency (40mpg highway). It will compete with Toyota Corolla and Honda Civic, which are major models in the C segment in the US. The new model will also be produced at the Canton plant in the US starting in the fourth quarter of 2012.

 (Note) Besides the Sentra, Nissan is producing Tiida, Versa and Micra at its Aguascalientes plant. It was reported that the New Note, which shares the V-platform with the Versa and the Micra, would also be produced in Mexico.

Honda to construct a new plant with production capacity of 200,000 units/year

 Honda will invest about USD800 million and started the construction of a new vehicle plant in Celaya, Guanajuato in March 2012. The new plant is capable of producing 200,000 units/year (2 shifts) and is scheduled to start operations in the spring of 2014. It plans to produce the Fit, a core compact car. It will employ 3,200 workers when in full production. By producing a fuel-efficient compact car at the new plant in Mexico, Honda will prepare a local production structure that covers multiple segments in North America in order to enhance its operations in North America. It plans to supply the product to Mexico, the US, Canada, and other regions.

 

Mazda to start operations of a new plant with production capacity of 140,000/year in FY2013

 Mazda will invest USD500 million in the construction of a new plant in Salamanca, Guanajuato. Mazda and Sumitomo Corporation will take a 70% and 30% stake, respectively, to establish a joint venture production company - Mazda Motor Manufacturing de Mexico. The construction began in October 2011. Mazda aims to start operations in January-March 2014. The new plant consists of engine, body, stamping, and assembly plants (transmissions will be exported from Japan). It has production capacity of 140,000/year (several tens of thousands of units in the first year). Mazda plans to produce the Mazda2 (Demio) and the Mazda3 (Axela) on the same production line.
 Originally, Mazda regarded the plant as a production facility for compact cars for Latin America and planned to export the product to Brazil. However, due to trade friction between Brazil and Mexico, the financial amount of export of passenger cars will be limited during the three years starting in 2012. Mazda is said to be reviewing the plan in its entirety, including production in Brazil.

 

 



Brazil restricts the financial amount of customs-free exports from Mexico while Argentina abandons Auto Pact

 In Brazil and Argentina, imports of vehicles from Mexico have surged in recent years and the following friction has arisen over the Auto Pact. The Mexican government has reached an agreement with the Brazilian government on the restriction of the financial amount of customs-free export, but the Argentine government says that it will abandon the Auto Pact one-sidedly and there is a concern over the future move.

Brazilian government reaches an agreement with the Mexican government on three-year restriction of customs-free export

Demand by the Brazilian government  In 2002, the Mexican government concluded Mexico - MERCOSUR automotive sector ACE (Acuerdo de Complementacion Economica) - 55 with the Brazilian government, which exempts import duties for vehicles and auto parts. As a result, exports from Mexico, where production efficiency is higher, to Brazil soared. In 2011, the trade deficit with Mexico totaled USD1.7 billion. The Brazilian government asked the Mexican government for the restriction of customs-free exports and the increase in the local-content ratio in order to protect the local industry and reached the following agreements in March 2012.
Agreements  (1) Mexico will restrict the financial amount of customs-free export of passenger cars to Brazil during the three years from 2012. The financial amount is USD1.45 billion in 2012, USD1.56 billion in 2013, and USD1.64 billion in 2014.
 (2) The local-content ratio of the above-mentioned customs-free import cars will be increased from the current 30% to 35% by March 2013 and further to 40% by March 2016 (The standard for the local-content ratio of customs-free export cars from Brazil to Mexico is 65%).
Allocation to OEMs  In April 2012, the allocation to OEMs of customs-free export quota was announced. It is estimated that the quota had been adjusted among concerned parties considering actual export and production in the past and export plan to Brazil. Nissan has the largest annual quota of USD328.98 million, followed by Ford USD264.14 million, VW USD264.04 million, Chrysler USD256.83 million, GM USD226.58 million, and Honda USD155.1 million. The annual quota will remain the same for each OEM during the three years. There are also reserves for OEMs that will newly enter the market (no reserves in 2012, USD110 million in 2013, and USD190 million in 2014).
2012 estimate  Calculated from the customs-free export quota (USD1.45 billion) for 2012, the exports are estimated to be about 60% of the 2011 actual exports (around 90,000 units). An import duty of 35% will be imposed in Brazil on exports that exceed the quota. With this measure, export of vehicles to Brazil is expected to slow down in the future.

 

Argentine government abandons the Auto Pact with Mexico one-sidedly

 Mexico concluded a similar Auto Pact with Argentina in 2002. The trade deficit of Argentina with Mexico surged to USD590 million in 2010 and further to USD1.59 billion in 2011 (of which the trade deficit from the automotive sector is USD995 million). In March 2012, the Argentina government, following Brazil, asked Mexico for the revision of the Auto Pact, but the Mexican government did not agree. Against this, the Argentine government decided that it would unilaterally suspend the Auto Pact for three years. There is a media report that the Mexican government is preparing to file a WTO complaint against Argentina.

 

 



(Reference) Production, export and domestic sales in Mexico by OEM

 

Production volume of vehicles by OEM

(Units)
2007 2008 2009 2010 2011 Jan.-Jul.
2011
Jan.-Jul.
2012
GM 467,667 508,748 350,534 559,316 543,502 332,683 300,093
Ford 304,137 314,231 234,330 393,649 462,462 270,282 278,408
Fiat-Chrysler 283,960 280,147 157,082 257,319 338,772 159,645 263,090
VW 409,566 449,096 319,743 434,685 510,041 294,820 339,642
Nissan 498,288 449,447 355,414 506,490 607,087 321,527 404,543
Toyota 32,249 49,879 42,696 54,278 49,596 27,201 32,171
Honda 26,374 51,253 47,728 55,001 45,390 24,064 36,667
Others 38 700 680
Light vehicles total 2,022,241 2,102,801 1,507,527 2,260,776 2,557,550 1,430,902 1,654,614
Medium- and heavy-duty trucks and buses total 86,342 78,933 56,642 86,748 136,678 75,036 87,165
Grand total 2,108,583 2,181,734 1,564,169 2,347,524 2,694,228 1,505,938 1,741,779

Source: AMIA (Ward's Automotive Reports for production volume of medium- and heavy-duty trucks and buses since 2011)

 

Exports of light vehicles by OEM

(Units)
2007 2008 2009 2010 2011 Jan.-Jul.
2011
Jan.-Jul.
2012
GM 383,943 387,152 280,673 460,112 443,242 274,065 255,240
Ford 263,452 272,924 231,003 384,959 449,925 264,223 261,469
Fiat-Chrysler 272,109 253,601 135,011 224,078 323,096 179,584 248,141
VW 331,453 382,755 271,391 350,721 429,987 239,852 295,746
Nissan 314,269 280,964 225,726 344,246 411,661 213,752 271,518
Toyota 32,249 50,092 42,696 54,278 49,539 27,144 32,171
Honda 15,755 34,112 36,829 41,121 36,429 18,355 18,485
Others 83 19 4
Total 1,613,313 1,661,619 1,223,333 1,859,515 2,143,879 1,216,975 1,382,770

Source: AMIA

 

Domestic sales of light vehicles by OEM

(Units)
2007 2008 2009 2010 2011 Jan.-Jul.
2011
Jan.-Jul.
2012
GM 227,845 210,469 138,352 155,580 168,502 89,826 99,791
Ford 152,683 128,504 88,748 87,533 86,323 45,296 44,890
Fiat-Chrysler 131,841 119,341 85,845 81,076 84,682 46,266 50,437
VW 153,809 137,704 117,960 129,483 153,004 84,366 88,399
Renault-Nissan 232,734 228,082 167,686 207,564 247,872 129,137 151,022
Toyota 66,208 63,306 51,991 46,769 48,589 25,033 29,455
Honda 54,802 56,264 37,187 39,866 36,209 18,775 29,675
Seven OEMs total 1,019,922 943,670 687,769 747,871 825,181 438,699 493,669
Other OEMs 73,430 76,822 64,776 70,914 79,018 41,914 43,884
Grand total 1,093,352 1,020,492 752,552 818,785 904,199 480,613 537,553
Place of origin Mexico 697,574 665,173 497,544 543,272 611,214 325,100 358,303
Imported 395,778 355,319 258,008 275,513 292,985 155,513 179,250

Source: Ward's Automotive Yearbook/Ward's Automotive Reports

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