Mexican light vehicle production approaches three million units

Exports to Brazil and Argentina to drop as the country reaches tariff-free export quotas

2013/08/08

Summary

Mexican light vehicle production forecast (LMC Automotive) Mexican production volume of light vehicles reached a record high of 2.88 million units and the export of 2.36 million units also renewed its record in 2012. The production also hit a record high of 1.49 million units in the January-June 2013 period, up 5.1% year-on-year. As several OEMs plan to build new plants, production is expected to expand even larger. (Please refer to the chart.)

 This surge in production is in response to continued robust sales.  In 2012, 987,000 light vehicles were sold in Mexico, up 9.0% y/y. LMC Automotive forecasts that light vehicle sales in Mexico in 2013 will increase by 8.5 % to 1.07 million units. The Mexican sales are projected to continue to expand to 1.26 million by 2016. The global research company said "[this] is the first time it has exceeded the 1 million thresholds since 2008. Possible risks remain form the lingering European debt crisis and any stalling in the US recovery (ongoing budgetary gridlock). Sales are expected to return to the pre-global crisis level of nearly 1.13 million units (a 6.6% improvement) next year."


Related Reports:  Nissan mulls new plant in North America by 2017 (Jul. 2013)
US Market: Continued growth spurs investment (Jun. 2013)
Japanese suppliers expand production in Mexico and Brazil (Jun. 2013)


Jan.-Jun. 2013 light vehicle production posted record high of 1.49 million units

 In 2012 as for light vehicles excluding medium- to heavy-duty commercial vehicles, the production augmented to 2.88 million units, up 12.8% y/y, and the export renewed its record with 2.36 million units, up 9.9 % y/y. Increased exports to the strong U.S. market and increased domestic sales were contributing factors for the production growth.

 Although the production volume in the first half of 2013 was 1.49 million units, the highest in history, the year-on-year growth rate slightly declined to 5.1%. Export decreased by 1.2% y/y to 1.16 million units, as restrictions have been imposed on the non-tariff exports to Brazil and Argentina.

 In 2012, sales of light vehicles grew 9.0% y/y to 987,000 units, approaching to the level prior to the 2008 financial crisis of over one million units. In the first half of 2013, light vehicle sales increased by 8.6% y/y to 502,000 units, at a pace of one million units a year. The easing of regulations on used car imports from the U.S. in 2011 is said to be the reason that the sales is recovering from the financial crisis slower than the production has.

Production, export and domestic sales of light vehicles in Mexico

(units)
2007 2008 2009 2010 2011 2012 2012
Jan.-Jun.
2013
Jan.-Jun.
Production 2,022,241 2,102,801 1,507,527 2,260,776 2,557,550 2,884,869 1,416,563 1,488,162
Export 1,613,313 1,661,619 1,223,333 1,859,517 2,143,884 2,355,564 1,174,508 1,160,881
Export/production 79.8% 79.0% 81.1% 82.3% 83.8% 81.7% 82.9% 78.0%
Mexican sales 1,099,866 1,025,520 754,918 820,406 905,886 987,747 462,239 501,987
Source: Asociacion Mexicana de la Industria Automotriz (AMIA)
(Note) 1. The above data show total of light vehicles (passenger cars and light trucks) and exclude medium- and heavy-duty trucks and buses.
2. Mexican sales include domestically-produced vehicles and imports.


 In Mexico, three U.S. OEMs, three Japanese OEMs and VW manufacture light vehicles. Fiat-Chrysler continued to increase production in 2012, by approx. 30% y/y, as production of the Fiat brand vehicles and the Chrysler pickup trucks expanded. In the first half of 2013, however, the Group reduced production by 7.7% y/y as production of these models dropped on the contrary. GM started manufacturing the Silverado new full-size pickup truck, the Trax small SUV and the Sonic compact sedan and produced 302,000 vehicles in the first half of 2013, up 18.3% y/y.

Production, export and domestic sales of light vehicles by OEM

(units)
Production Export Mexican sales
2011 2012 Changes 2011 2012 2011 2012
GM 543,502 570,942 5.0% 443,242 465,277 168,502 186,383
Ford 462,462 451,648 (2.3%) 449,925 384,665 88,004 84,382
Fiat-Chrysler 338,772 455,334 34.4% 323,096 424,754 84,682 93,154
VW 510,041 604,508 18.5% 429,987 518,132 153,010 164,570
Renault-Nissan 607,087 683,520 12.6% 411,661 467,338 247,872 270,728
Toyota 49,596 55,661 12.2% 49,539 55,661 48,589 56,278
Honda 45,390 63,256 39.4% 36,429 39,737 36,209 54,515
Others 700 0 (100.0%) - - 79,018 77,737
Total 2,557,550 2,884,869 12.8% 2,143,879 2,355,564 905,886 987,747

 

Production Export Mexican sales
Jan.-Jun.
2012
Jan.-Jun.
2013
Changes Jan.-Jun.
2012
Jan.-Jun.
2013
Jan.-Jun.
2012
Jan.-Jun.
2013
GM 255,389 302,219 18.3% 218,207 229,996 86,514 94,455
Ford 242,013 268,846 11.1% 228,187 226,115 39,233 40,894
Fiat-Chrysler 229,965 212,260 (7.7%) 214,136 194,927 42,703 42,819
VW 278,026 292,749 5.3% 240,574 239,722 75,537 89,949
Renault-Nissan 351,315 349,937 (0.4%) 230,416 222,812 129,510 137,001
Toyota 28,329 31,645 11.7% 28,329 31,645 25,687 27,317
Honda 31,431 30,506 (2.9%) 14,658 15,664 25,165 28,111
Others - - - - - 37,890 41,501
Total 1,416,468 1,488,162 5.1% 1,174,507 1,160,881 462,239 502,047

Source: AMIA report
Note: Numbers in brackets "(   )" represent negative value.


 The light vehicle exports from Mexico in the first half of 2013 dropped 1.2% y/y to 1.16 million units due to decreased exports to Latin America and Europe. Exports to Latin America largely declined by 32.8% y/y since the tariff-free exports to Brazil and Argentina have been restricted. Those to the largest export market of the U.S. rose by 4.5% y/y to 774,000 units. Exports to Asia grew significantly as well, posting 40,000 units approximately, which is 2.5 times as many as the previous year result. Chrysler, VW and Nissan, the three OEMs exporting to Asia, increased shipments to the area.

Exports of light vehicles from Mexico by destination

(units)
2009 2010 2011 2012 Jan.-Jun.
2012
Jan.-Jun.
2013
US 878,742 1,277,184 1,362,425 1,504,364 740,945 773,972
Canada 98,949 142,800 159,440 160,086 85,612 95,496
Latin America 104,073 206,468 319,561 366,133 204,809 137,608
Africa 0 9,494 8,012 34,734 10,571 11,472
Asia 12,333 29,050 25,538 46,640 15,405 39,583
Europe 126,515 178,221 220,788 212,792 100,067 88,547
Others 2,721 15,965 48,115 30,815 17,098 14,203
Total 1,223,333 1,859,182 2,143,879 2,355,564 1,174,507 1,160,881

Source: AMIA

 

 



Major OEMs' light vehicle production facilities in Mexico

 Listed below are outlines of completed vehicle plants of eight major automakers manufacturing light vehicles in Mexico, including Mazda's in the planning phase.

 In the first half of 2013, GM augmented production as it began manufacturing the Chevrolet Silverado/GMC Sierra full-size pickup trucks at Ramos Arizpe plant and the Trax compact SUV at San Luis Potosi plant. Production increased at Ford's Hermosillo plant as it started manufacturing the new Fusion and the new MKZ. By contrast, production at Fiat-Chrysler's both Saltillo and Toluca facilities declined.

 As for new production models, Fiat-Chrysler introduced the Ram ProMaster, the Fiat Ducato-based large commercial van, to its Saltillo plant in July 2013. VW is scheduled to output the Golf at the Puebla plant from 2014. Nissan plans to supply the NV200 small commercial vans to GM as the Chevrolet City Express from the fall of 2014.

 At the new plants yet to be operational, Audi of the VW Group will commence production of the next Q5 SUV in 2016; Nissan will produce B-platform vehicles from the end of 2013; Honda will manufacture the Fit small cars from the spring of 2014; and Mazda will manufacture the Mazda2, Mazda3 and the Mada2-based Toyota brand small cars from the first quarter of 2014.

Assembly plants of light vehicles by major OEMs

OEM Plant Major production models Production volume (units)
2012 Jan-May
2012
Jan-May
2013
GM Ramos Arizpe Cadillac SRX, Chevrolet Captiva Sports,
Chevrolet Sonic
172,432 64,098 76,552
Silao Chevrolet Silverado,GMC Sierra, Cadillac Escalade, Chevrolet Avalanche (ended in April 2013) 300,931 107,382 115,043
San Luis Potosi Chevrolet Aveo, Trax 96,238 34,259 52,237
GM Sub-total 569,601 205,739 243,832
Ford Hermosillo Ford Fusion, Lincoln MKZ 305,975 137,772 162,099
Cuautitlan Ford Fiesta 138,450 57,921 58,151
Ford Sub-total 444,425 195,693 220,250
Fiat-Chrysler Saltillo Ram Pickup, Ram ProMaster(from July 2013) 181,836 75,757 71,353
Toluca Dodge Journey/Fiat Freemont, Fiat 500 260,590 113,131 103,218
Chrysler Sub-total 442,426 188,888 174,571
VW
(Audi)
Puebla VW Beetle/Cabrio, Bora, Jetta,
Golf(form 2014)
604,508 217,522 240,555
SanJose Chiapa Audi Q5 (form 2016) Annual production capacity
150,000 units
VW Sub-total 604,508 217,522 240,555
Nissan Aguascalientes Nissan Sentra, Versa, Tiida, Micra(March in Japan), Versa Note(from spring 2013) 384,196 169,818 188,785
Cuernavaca Nissan Tsuru, Tiida, NV200(Chevrolet City Express, from 2014), NP300, Frontier, Pickup, chassis 299,324 118,297 101,571
Third plant
(Aguascalientes)
B-platform model
(from the end of 2013)
Annual production capacity
(first stage) 175,000 units
→(mid-target) 200,000 units
Nissan Sub-total 683,520 288,115 290,356
Toyota Tijuana Toyota Tacoma 55,676 23,597 25,996
Honda El Salto Honda CR-V 61,813 26,300 25,158
Celaya Honda Fit (from the spring of 2014) Annual production capacity
200,000units
Honda Sub-total 61,813 26,300 25,158
Mazda Salamanca Mazda2(Demio in Japan), Mazda3(Axela in Japan), Toyota brand compact (Based on Mazda2) (Production to start in Q1 2014) Annual production capacity
230,000units (FY2015)
Source: Ward's Automotive Yearbook, Ward's Automotive Report
(Note) 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 to140,000 units in 2012.

 

 



Three U.S. OEMs: GM, Ford and Fiat-Chrysler

GM will invest USD 691 million in its three Mexican plants to increase powertrain production.

 GM announced in June 2013 that it will invest a total of USD 691 million in its three plants in Mexico. It will put in USD 349 million in the Silao plant to prepare for the 8-speed automatic transmission (AT) production, USD 131 million in the San Luis Potosi plant for the next-generation AT and USD 211 million in the Toluca engine plant to increase the capacity.
 GM discontinued production of the Avalanche full-size pickup trucks at the Silao plant in the spring of 2013. It had invested USD 200 million in the plant and started producing the new Chevrolet Silverado/GMC Sierra pickup trucks from the end of 2012.

 

Ford plans to transfer production of the Fiesta from the Cuautitlan plant to Thailand

 It has been reported that Ford plans to transfer production of the Fiesta at the Cuautitlan plant in Mexico to Thailand in 2016 in order to increase the available capacity in North America. It thus aims to achieve the optimum production as its capacity utilization ratio in North America as of May 2013 exceeded 110%. Another reason is the fact that the Fiesta- class small cars are most sold in Asia and Europe. At the Cuautitlan plant, Ford had manufactured the most selling F-series pickup trucks up to 2008.

 

Fiat-Chrysler produces a large commercial van based on a Fiat model at the Saltillo plant.

 Chrysler announced in July 2013 that it started production of the Ram ProMaster large commercial van at its Saltillo plant in Mexico. The model will be launched in North America from the fall of 2013. Based on the Fiat Ducato, it will be a part of the Ram brand lineup as the first large van after the Mercedes-based Sprinter, which was discontinued in 2010. Chrysler will be supplied with the Fiat Doblo produced in Turkey, which will be launched as a small commercial van of the Ram brand lineup in the 2014 model year.

 

 



European OEMs: Audi will manufacture Q5 from 2016 at first plant in North America

VW will begin production of the seventh-generation Golf in 2014.

 VW will start manufacturing the seventh-generation Golf at its Puebla plant in Mexico from the first quarter of 2014. The automaker, therefore, will invest approx. USD 700 million to increase the production capacity by approx. 10%. In 2012, it produced about 600,000 units. VW aims to sell one million vehicles per year in North America by 2018 including 200,000 Audi brand vehicles, and plans to manufacture 75% of them in North America. In 2012, a little less than 70% of the vehicles sold in North America were manufactured in North America. In the three years from 2013, it plans to make investments of USD 5 billion.
 VW opened a 330,000-unit/year engine plant in January 2013 at Silao, Guanajuato. The automaker invested USD 550 million. The new plant will supply the TSI fuel-efficient gasoline engines to VW's two complete vehicle plants in North America: the Puebla plant in Mexico and the Chattanooga plant in the U.S.

Audi will build a new plant in Mexico to produce the Q5 SUV from 2016.

 Audi of the VW Group broke ground on its first North American plant in San Jose Chiapa, Mexico in May 2013. The plant with the 150,000-units/year capacity will supply the next-generation Q5 SUV to the U.S. and other markets worldwide. The automaker will invest over USD 900 million over the next two years to set up a body shop, a paint shop, an assembly line and also a press shop. It also considers doubling the capacity in the long term.
 Audi plans to establish two supplier parks in Mexico, one adjacent to its plant and the other in a neighboring area, by 2016. Initially it plans to purchase 60% of the Q5 parts from the three countries in North America with an ultimate target of 80%. VW already has a plant near the Audi plant.

 

Daimler considers production of a Mercedes-Benz model at Nissan's Mexican plant.

 Daimler studies the possible production of the next-generation CLA, a Mercedes-Benz brand small four-door coupe, in Mexico, which should be determined by early 2014 (according to a media report in July 2013). Production is anticipated to commence in 2018 at its partner, Nissan's Aguascalientes plant. The current CLA has been manufactured in Hungary from January 2013 and enjoys brisk sales. The automaker aims to decrease the influence of exchange rate fluctuations by manufacturing the model also in North America.

 

 



Japanese OEMs: Nissan, Honda and Mazda are building new plants in Mexico

Nissan is constructing its third plant in Mexico to manufacture a B-platform car from the end of 2013.

 With USD 2 billion investment, Nissan is building its third Mexican plant at an adjacent site to its existing one in Aguascalientes, which is scheduled to start operations by the end of 2013. The annual production capacity will be 175,000 units in the initial stage, which will be raised to 200,000 units in the medium term. Nissan will manufacture a B-platform model, reported as the Versa, for Mexico and other markets overseas. Production of a small car of its capital and business alliance partner Daimler is also under contemplation as explained above.

Note: Nissan considers building another plant either in Mexico or the U.S. as early as 2017.

Nissan will supply Mexican-made NV200 to GM.

 Nissan will supply its NV200 small van manufactured at its Cuernavaca plant to GM. GM will launch it as the Chevrolet City Express from the fall of 2014. GM will modify the model including the front design at its Ramos Arizpe plant in Mexico and launch it in the U.S. and Canada.
 Nissan has manufactured the NV200 since early 2013 and the output up to June 2013 totals approx. 2,800 units. It plans to raise the monthly production to over 1,000 units. From late 2013, Nissan will supply the taxi-version NV200 passenger vans to New York City as an exclusive provider.

 

Honda builds a new 200,000-vehicles/year plant and a continuously variable transmission (CVT) plant.

 Honda is constructing a new automobile plant in Celaya, Guanajuato with USD 800 million. With the annual capacity of 200,000 units on two shifts with regular hours, the plant will commence operations in the spring of 2014. Honda's flagship small car Fit and its derived models (sedan and crossover) will be manufactured and shipped to Mexico, the U.S., Canada and other markets. It has also been reported that the automaker will double the annual production capacity.
 In May 2013, Honda announced its plan to build a new CVT plant at the same site as the new plant. It will invest USD 470 million. The initial production capacity will be 350,000 units/year, which will be doubled to 700,000 units in late 2016.

 

Mazda will make additional investment in the new plant under construction to supply small cars to Toyota

 Mazda announced in January 2013 that it will raise the production capacity of its new plant currently constructed in Salamanca, Guanajuato from initially projected 140,000 vehicles to 230,000 vehicles in FY2015. It has been decided because Mazda will supply small cars to Toyota and the sales of the SKYACTIV models are expected to increase. The plant is scheduled to start operations in early 2014. The automaker will invest additional USD 150 million for the expansion, which will raise the total investment to USD 650 million. There will be engine, body, stamping and assembly lines. Transmissions will be shipped from Japan. The Mazda2 (Demio), Mazda3 (Axela) and a Toyota-brand model will be manufactured.
 Mazda and Toyota announced in November 2012 that Mazda's new plant, under construction in Mexico, will produce a Toyota-brand vehicle, mainly targeting North America. Production of approx. 50,000 units/year of a sub-compact model based on the Mazda2 will start around the summer of 2015. Toyota will provide an appropriate portion of development and production equipment costs related to the plant's production-capacity increase.

Note: Mazda originally positioned the new plant as its small car production base for the Latin American market and planned to export to Brazil. It has been reported that Mazda gave up exporting to Brazil because the value of passenger car exports from Mexico to Brazil should be restricted for the three years from 2012, as explained below.

 

 



Amount of duty-free vehicle exports to Brazil and Argentina restricted up to March 2015

 Surging auto exports from Mexico to Brazil and Argentina have caused trade frictions over their auto pacts between the Mexican government and the respective countries. Mexico reached an agreement with the Brazilian government in March 2012 by imposing restrictions on the tariff-free auto export amount. The Argentine government followed Brazil and called on the Mexican government for similar restrictions. Argentina withdrew from the auto pact with Mexico unilaterally and then the two countries reached an agreement in December 2012 on imposing quota on the amount of tariff-free auto exports.

The Brazilian government agreed with the Mexican government to cap tariff-free auto exports for three years.

Agreements The Brazilian government asked the Mexican government to limit the tariff-free auto exports and to raise the local content ratio in order to protect its industry. They agreed in March 2012 as stated below.
(1) The duty-free exports of passenger cars from Mexico to Brazil should be limited for the three year period starting in FY2012 (Please refer to the note below): a total annual export quota of USD 1.45 billion for FY2012, USD 1.56 billion for FY2013 and USD 1.64 billion for FY2014. The quotas should be abolished thereafter.
(2) The local content ratio of the passenger cars to be exported duty-free from Mexico to Brazil should be increased from current 30% to 35% by March 2013 and to 40% by March 2016. The local content ratio standard for duty-free auto exports from Brazil to Mexico is 65%.
Annual quotas for respective automakers, announced in April 2012 USD 328.98 million for Nissan, USD 264.14 million for Ford, USD 264.04 million for VW, USD 256.83 million for Chrysler, USD 226.58 million for GM and USD 105.51 million for Honda. These quotas should be valid for the three years. The quotas reserved for new entries: zero for FY2012, USD 110 million for FY2013 and USD 190 million for FY2014.

Note: Every fiscal year starts on March 19 and ends on March 18.

The Argentine government agreed with the Mexican government on the three-year pact for tariff-free auto exports

Requests from Argentina Argentina signed the Economic Complementation Agreement (ACE) 55 with Mexico in 2002 and remitted tariffs on automobiles and auto parts. Recently its automobile-related industry has been suffering from increasing imports from Mexico.
After the governments of Brazil and Mexico reached an agreement in March 2012 on the tariff-free export quotas, the Argentine government demanded the similar concessions from the Mexican government. After Mexico's refusal, Argentina unilaterally announced its decision to suspend the ACE 55 for three years and halted it from June 2012. In December 2012, the two governments announced that they have sealed a new pact.
Agreements Duty-free imports of passenger cars and light commercial vehicles from Mexico should be restricted as follows: USD 575 million for the first year (Dec. 18, 2012 - Dec. 17, 2013), USD 625 million for the second year (Dec. 18, 2013 - Dec. 17, 2014) and USD 187.5 million for the three months of the third year (Dec. 18, 2014 - March 18, 2015). The quotas should be abolished thereafter. In 2011 auto imports from Mexico totaled USD 870 million and these duty-free quotas are in the level of about 3/4 of it.
Annual quotas for respective automakers The quotas valid for three years: 25.3% for GM, 24.5% for VW, 18.0% for Nissan, 17.3% for Ford, 10.3% for Chrysler and 4.7% for Honda. Additional quotas will be provided in case exports from Argentina to Mexico should increase.

 

 



Production Forecast by LMC Automotive: Mexican production forecast by OEM Brand

(LMC Automotive、June 2013)

 According to LMC Automotive's forecast in June 2013, Mexican light vehicle production in 2013 will increase by 3.0% to 2.93 million units. The growth continues to 2016 and reaches 3.66 million units, with Nissan, Honda, Mazda and VW contributing to the increase.

 LMC Automotive comments, "production in 2014 is forecast to see a 5.0% increase compared to [2013], led by Honda's expansion in Mexico with the Celaya facility slated to open in April next year, starting with the Fit model (currently imported into North America)."

Mexican production forecast through 2016 (LMC Automotive)

(units)
SALES GROUP GLOBAL MAKE 2010 2011 2012 2013 2014 2015 2016
Total 2,211,034 2,532,469 2,846,438 2,933,194 3,139,291 3,469,860 3,660,622
Fiat-Chrysler Group Chrysler 11,083 0 0 0 0 0 0
Dodge 226,612 265,785 346,347 335,258 328,090 254,625 218,929
Fiat 724 56,972 81,824 71,054 82,316 56,420 29,480
Jeep 0 0 0 0 0 75,645 165,597
Fiat-Chrysler Group Sub-total 238,419 322,757 428,171 406,312 410,406 386,690 414,006
Ford Group Ford 344,891 420,092 423,423 461,296 432,445 322,951 309,303
Lincoln 24,342 35,399 20,740 46,974 44,560 45,920 48,839
Mercury 21,155 0 0 0 0 0 0
Ford Group Sub-total 390,388 455,491 444,163 508,270 477,005 368,871 358,142
General Motors Group Cadillac 79,238 87,856 92,716 85,707 84,161 77,625 0
Chevrolet/Daewoo 381,403 368,029 381,489 449,000 469,931 502,878 502,029
GMC 80,594 86,489 94,711 97,080 110,880 108,124 101,223
Saturn 2,886 0 0 0 0 0 0
General Motors Group Sub-total 544,121 542,374 568,916 631,787 664,972 688,627 603,252
Honda Group Honda 55,001 45,426 61,813 58,072 163,334 321,871 481,174
Mazda Motors Mazda 0 0 0 0 55,719 163,144 175,327
Other Saab 0 604 0 0 0 0 0
Renault-Nissan Group Infiniti 0 0 0 0 0 30,126 46,558
Nissan 494,581 607,098 685,035 724,006 758,890 762,443 731,452
Renault 2 0 0 0 0 0 0
Renault-Nissan Group Sub-total 494,583 607,098 685,035 724,006 758,890 792,569 778,010
Toyota Group Toyota 53,830 49,596 55,676 57,733 54,185 68,952 97,563
Volkswagen Group Audi 0 0 0 0 0 0 70,458
Volkswagen 434,692 509,123 602,664 547,014 554,780 679,136 682,690
Volkswagen Group Sub-total 434,692 509,123 602,664 547,014 554,780 679,136 753,148
Source:LMC Automotive "Global Automotive Production Forecast (June, 2013)"
(Note) 1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.
3. For more detailed information or inquiries of forecast data, please contact LMC Automotive.

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