Mexico: Audi, BMW, Nissan/Daimler, and Kia race to build new plants
Record 1.86 million light vehicles produced in first seven months of 2014
Why Mexico is appealing as production and export hub
A favorable geographic location, low labor costs, and free trade agreements with 45 nations and regions make Mexico advantageous to become a production and export hub of automobiles.
Production and exports hit record highs both for 2013 and January-July period of 2014
Based on AMIA's data, Mexican light vehicle production and exports increased to 2.93 million units and 2.42 million units, respectively, in 2013, both hitting record highs. For the January-July period of 2014, production and exports also reached their record performances for the period.
According to LMC Automotive's latest forecast (in July 2014), 2014 Mexican production will rise to 3.17 million units. LMCA forecasts that Mexican production is expected to grow further over next three years and will climb to 4.17 million units in 2017.
OEMs rushing to build new plants
Following Nissan, Honda and Mazda, Audi is scheduled to start operations of a new plant in 2016. Nissan and Daimler will produce premium compact vehicles at a new joint venture facility from 2017. BMW will build its first plant in Mexico and start production in 2019. South Korea's Kia Motors has also announced a plan to build a new plant.
Sales top one million units in 2013 and rise slightly for January-July period of 2014
Mexican light vehicle sales in 2013 grew 7.7% year-on-year (y/y) to 1.06 million units, marking the highest since 2007. Nevertheless, sales for the January-July period of 2014 increased only slightly to 600,000 units, up 1.3% y/y.
U.S. Market: Sales recovering to pre-financial crisis levels (Aug. 2014)
Japanese suppliers in Latin America (part 1): New plants in Mexico (Mar. 2014)
Japanese suppliers in Latin America (Part 2): Trends in Brazil and Mexico (Mar. 2014)
81% of Mexican output exported during January-July period of 2014
In 2013, Mexican light vehicle production (excluding medium- and heavy-duty commercial vehicles) increased by 1.7% year-on-year (y/y) to a record high of 2.93 million units. Exports from Mexico also reached a record 2.42 million units, accounting for 82.6% of output. During the January-July period of 2014, production climbed 7.5% y/y to 1.86 million units while exports rose to 1.51 million units, amounting to 81.1% of production. Both production and exports hit record highs for the period.
In Mexico, three US OEMs, four Japanese OEMs (including Mazda from 2014), and VW are producing light vehicles. Among them, Nissan is the largest maker, building 680,000 units in 2013. Nissan has started operations of its third plant in Mexico in November 2013, thereby boosting its annual production capacity from 680,000 to 850,000. In the same year, GM built 646,000 units, up 13.1% y/y, with increased production of the Silverado full-size pickup, Trax compact SUV, and Sonic compact sedan. Ford's output also grew 16.3% y/y to 525,000 units, led by an increase in production of the Fusion and the Lincoln MKZ. On the other hand, VW's production fell 14.6% y/y to 516,000 units.
For the January-July period of 2014, Nissan and GM built 470,000 and 411,000 units, up 18.0% and 13.1% y/y, respectively. Honda's output surged 63.0% y/y to 60,000 units owing to the opening of its second plant. Mazda, which has started operations of its first plant in the country, produced 37,000 units.
Regarding light vehicle sales in Mexico by OEM for the January-July period of 2014, Renault-Nissan ranked first with sales of 164,000 units. Renault-Nissan's market share amounted to 27.6%. GM's market share was 19.3% with sales of 115,000 units, while VW, which sold 109,000 units, accounted for 18.2%. The three OEMs were followed by Ford and Fiat-Chrysler. Mazda, which has just started local production in 2014, gained a share of 3.5% with sales of 21,000 units.
Mexican light vehicle production, exports and sales
|2009||2010||2011||2012||2013||Jan.-Jul. 2013||Jan.-Jul. 2014|
|Sales in Mexico||754,918||820,406||905,886||987,747||1,063,363||588,632||596,571|
|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.||Sales in Mexico include locally-built vehicles and imports.|
Light vehicle production, exports and sales in Mexico by OEM
|Production||Exports||Sales in Mexico|
|Jan.-Jul. 2013||Jan.-Jul. 2014||YoY||Jan.-Jul. 2013||Jan.-Jul. 2014||Jan.-Jul. 2013||Jan.-Jul. 2014|
Exports from Mexico by destination
For the January-July period of 2014, light vehicle exports from Mexico grew 11.2% y/y to 1.51 million units. Exports to the U.S. amounted to 1.08 million, up 19.7% y/y, accounting for 71.5% of the overall exports. Those for North America including Canada took up 80.8% of the total. Exports to Europe, where the market is still sluggish, dropped 38.5% y/y. Those for Latin America decreased by 9.2% y/y as the values of tariff-free exports to Brazil and Argentina have been restricted since 2012. On the other hand, exports to Asia increased by 36.3% y/y while export volume amounted to only 57,000 units.
Major OEMs' light vehicle plants in Mexico
Listed below are outlines of vehicle assembly plants of 11 major automakers that are building light vehicles in Mexico (including plans). Nissan opened a second plant in Aguascalientes at the end of 2013. In the beginning of 2014, Honda started operations at a new plant in Celaya while Mazda opened its first plant in Mexico located in Salamanca.
For the January-June period of 2014, GM's production at its Silao plant grew with increased production of the Chevrolet Silverado full-size pickup. Fiat-Chrysler's output at its Saltillo plant also increased significantly as production of the Ram ProMaster, a large commercial van based on the Fiat Ducato, increased.
As for new models being or to be produced in Mexico, VW has started assembling the new Golf at its Puebla plant in January 2014. The automaker plans to manufacture a new four-door coupe to be launched around 2016 at the same plant. Honda has begun building the Fit compact car at its Celaya plant in February 2014. From the end of the same year at the same plant, Honda is scheduled to produce the HR-V compact SUV (known as the Vezel in Japan) to be released for the North American market. Mazda has started manufacturing the Mazda3 at its new plant in January 2014. The company will begin production of the Mazda2 by the end of 2014, and a Toyota brand car based on the Mazda2 in the summer of 2015.
Among the OEMs planning new production facilities, Audi of the VW Group and Kia Motors of the Hyundai Motor Group plan to start operations of their respective new plants in 2016. Daimler and Renault-Nissan Alliance will establish a joint venture and begin production at their plant in 2017. BMW has a plan to build a new plant which will come online in 2019. According to the media reports, Toyota is also examining a plan to construct a new plant in Mexico.
Major OEMs' light vehicle production facilities in Mexico
|OEM||Plant||Models produced at plant||Production volume (units)|
|2013||Jan.-Jun. 2013||Jan.-Jun. 2014|
|GM||Ramos Arizpe||Cadillac SRX, Chevrolet Captiva Sports, Chevrolet Sonic, Chevrolet City Express (based on Nissan NV200, from fall 2014)||186,097||92,324||101,128|
|Silao||Chevrolet Silverado/GMC Sierra, Chevrolet Avalanche, Cadillac Escalade||332,454||146,827||188,341|
|San Luis Potosi||Chevrolet Aveo, Trax||127,485||63,990||64,243|
|Ford||Hermosillo||Ford Fusion, Lincoln MKZ||375,588||194,755||167,689|
|Fiat-Chrysler||Saltillo||Ram Pickup, Ram ProMaster (based on Fiat Ducato, from July 2013)||203,158||88,276||124,268|
|Toluca||Dodge Journey/Fiat Freemont, Fiat 500||236,623||124,683||119,000|
|VW (Audi)||Puebla||VW Beetle, Bora, Jetta, Golf (from January 2014), new four-door coupe (from 2016)||516,146||292,749||248,443|
|San Jose Chiapa||Audi Q5 (from 2016)||Annual production capacity: 150,000 units|
|BMW||San Luis Potosi||Models to be determined (production to start in 2019)||Annual production capacity: 150,000 units|
|Daimler and Renault-Nissan Alliance||Aguascalientes||Daimler and Renault-Nissan's joint venture Infiniti models (from 2017) Mercedes-Benz models (from 2018)||Annual production capacity: 300,000 units (at full-scale operations in 2021)|
|Nissan||Aguascalientes first plant||Nissan Sentra, Versa, Tiida, Micra (sold as the March in Japan), Versa Note||415,691||205,538||207,561|
|Aguascalientes second plant||Sentra (from November 2013)||6,213||-||73,541|
|Cuernavaca||Nissan Tsuru, Tiida, NV200, Chevrolet City Express (based on NV200, from fall 2014), NP300, Frontier, Pickup, chassis||258,309||144,399||131,210|
|Honda||El Salto||Honda CR-V||63,172||30,506||31,619|
|Celaya||Honda Fit (from February 2014), HR-V (Sold as the Vezel in Japan, from end of 2014)||-||-||17,936|
|Mazda||Salamanca||Mazda3 (Sold as the Axela in Japan, from January 2014), Mazda2 (Sold as the Demio in Japan, from 2014), Toyota brand compact car (based on the Mazda2, from summer 2015)||-||-||25,466|
|Hyundai Motor (Kia Motors)||Monterrey||Models to be determined (production to start in 2016)||Annual production capacity: 300,000 units|
|Source: Ward's Automotive Yearbook, Ward's Automotive Report|
|(Note) 1.||Production volumes above are based on Ward's reports and do not coincide with AMIA's data.|
|2.||In Mexico, besides the OEMs listed above, Isuzu, Hino, Daimler, Volvo Trucks, Scania, MAN, Paccar, and Navistar are producing medium- and heavy-duty commercial vehicles. Their production totaled 128,000 units in 2013.|
Three US OEMs: GM, Ford and Fiat-Chrysler
GM to procure Nissan NV200 for sale as Chevrolet City Express
|In May 2013, GM and Nissan announced they have signed an agreement for GM to procure the NV 200 small commercial van from Nissan and to distribute the model as the Chevrolet City Express in North America starting in the fall of 2014. The City Express will be assembled at Nissan's Cuernavaca plant in Mexico. Then, GM will revamp the van including its front and rear styles as the Chevrolet model at its Ramos Arizpe plant. Through this agreement, GM aims to expand its portfolio of commercial vehicles and Nissan intends to enhance its manufacturing efficiency and growth.|
Ford to shift production of new F-650/F-750 medium-duty trucks to the US
|Ford plans to transfer production of the new F-650 and F-750 medium-duty trucks on sale in the spring of 2015 from Mexico to the U.S. At present, the company is building these models at the Escobedo plant owned by Blue Diamond Truck LLC, a joint venture between Ford and Navistar International. Under the labor agreement signed by Ford and the UAW in 2011, production of the next-generation models of these trucks will be shifted to Ford's Avon Lake plant in Ohio, the U.S. in early 2015.|
Fiat-Chrysler invests USD 1,249 million in two plants in Saltillo
|Production of Ram ProMaster at new plant||Fiat-Chrysler made investments totaling USD 1,249 million in two plants in Saltillo, Mexico. USD 1,085 million was used for constructing a new plant to produce the Ram ProMaster, a new large van. Operations of the new plant have started in July 2013. At the plant, the company is now producing the Ram ProMaster based on the Fiat Ducato for sale in Mexico, the U.S. and Canada.|
|Renovation of engine plant||USD 164 million was invested in the Saltillo North engine plant to add a new production line for assembling Tigershark engines. While the plant has been manufacturing the company's flagship HEMI V8 engines, it has also started production of the 2.0- and 2.4-liter Tigershark engines in the first quarter of 2014.|
(Note) Fiat-Chrysler's new light commercial vehicle, the Ram ProMaster City based on the Fiat Doblo, will be launched in North America as a 2015 model. Although the model had been projected to be built in Mexico, Fiat-Chrysler determined to produce it at the TOFAS plant in Turkey (announced in June 2014).
European and Korean OEMs: BMW, Audi, Daimler/Nissan, and Kia to build new plants
BMW to construct new plant with annual capacity of 150,000 units
|In July 2014, BMW announced a plan to construct a new plant close to the city of San Luis Potosi. With an investment of USD 1 billion, the plant is scheduled to start operations in 2019. It will have an annual capacity of 150,000 units. Models to be produced at the plant will be determined later. The workforce will reach around 1,500 people at the start of production.|
|BMW already disclosed an investment of USD 1 billion at its existing plant in Spartanburg, South Carolina, USA in March 2014. This will boost the plant's annual production capacity to 450,000 units. In May 2014, the company told that it would invest USD 200 million at the joint venture carbon fiber plant established with the SGL Group in Moses Lake, Washington, the U.S. With the additional investment at the new plant in Mexico, BMW plans to invest total of USD 2.2 billion in NAFTA regions by 2019.|
VW adds investment at engine plant; production of new Golf starts
|Additional investment for engine plant||In November 2013, VW announced an additional investment of USD 118 million at its Silao engine plant in Guanajuato. The new funding will be used to manufacture new variable camshaft systems for EA888 TSI engines. VW will add a 37,000-square-meter building to the existing plant with an area of 120,000 square meters. Production at the new building is planned to start in the first quarter of 2016. This engine plant was opened in January 2013 with an investment of USD 550 million. Its annual production capacity is 330,000 engines.|
|Production of new Golf starts||VW has begun production of the new Golf at its Puebla plant in Mexico in January 2014. An investment of USD 700 million was used to renovate the plant's facilities to assemble the new Golf. The VW Group has a plan to invest a total of USD 7 billion in North America during the five-year period of 2014-2018 to develop new models and enhance production capabilities. The Group aims to sell one million VW and Audi vehicles per year in the U.S. by 2018.|
|New four-door coupe||VW unveiled the New Midsize Coupe (NMC) concept at the Beijing Auto Show held in April 2014. This new four-door coupe, a fusion of a sedan and a sport car, is positioned beneath the Passat CC. The new coupe will be underpinned by the VW Group's latest MQB module and come with a 2.0-liter direct-injection inline-four-cylinder gasoline TSI engine with a turbocharger and a seven-speed dual-clutch transmission. The production version of the NMC is planned to be launched around 2016. The model will be produced at the joint venture plant established with SAIC Motor in China, and at VW's Puebla plant in Mexico.|
Audi to produce Q5 at new plant from mid-2016
|Audi of the VW Group has been building its first North American plant in San Jose Chiapa, Mexico since May 2013. As construction work is proceeding on schedule, the automaker plans to start series production of the Audi Q5 medium SUV in mid-2016. The new plant will have an annual capacity of 150,000 units. A supplier park will also be constructed at the site next to the plant. Audi projects that 65% of components for the Q5 in value terms will be procured in North America. In the medium term, the company intends to achieve 90% of localization.|
Daimler and Renault-Nissan Alliance to build joint venture plant
|In June 2014, Daimler and Renault-Nissan Alliance announced a plan to build a joint venture plant in Aguascalientes in north-central Mexico. The two companies have agreed to establish a fifty-fifty joint venture which will construct a new plant next to Nissan's existing Aguascalientes plant. The companies will equally divide investment costs of EUR 1 billion. Start of production is planned for 2017 with Infiniti models. Production of Mercedes-Benz vehicles will follow in 2018. The new plant will have an annual capacity of 300,000 units when fully ramped up in 2021.|
|Daimler and Renault-Nissan Alliance will also develop a new platform jointly for next-generation premium compact vehicles to be produced at the new plant. The Vehicles under two brands will differ from each other in terms of product designs and specifications. Using this platform, Nissan plans to build the Infiniti Q30, a fusion of a coupe, hatchback, and crossover, from 2017 and to follow it up with two more models including a compact SUV by 2020. The two companies consider that joint development of premium compact vehicles and joint production in Mexico represent one of the most important projects which will take their partnership to the next level.|
Kia Motors to build new plant; Hyundai Motor distributes under own brand
|Kia to build new plant||In August 2014, Kia Motors of the Hyundai Motor Group announced a plan to build a Group's first plant in Mexico. The new plant is projected to have an annual capacity of 300,000 units and to come online in 2016. A total investment is planned to be around USD 1 billion. From the new plant, Kia will supply the vehicles to Mexico as well as to the U.S. and South American countries. Currently Kia is operating plants in Korea, the U.S., China and Slovakia.|
|Hyundai sets up its own dealer network||Hyundai Motor used to supply the Hyundai Accent and Hyundai i10 compact vehicles to Chrysler de Mexico during the period between 2000 and 2013. Chrysler distributed them in Mexico as the Dodge Attitude and Dodge i10. However, Hyundai terminated the supply contract with Chrysler and set up its own dealer network in the country in 2014. Hyundai sold 1,002 vehicles under its own brand in June 2014.|
Japanese OEMs: Nissan, Honda and Mazda start operations of new plants
Nissan boosts annual capacity to 850,000 units; Leaf electric vehicle launched in Mexico
|Operations start at new plant||Nissan has completed the first phase of construction at the Aguascalientes second plant, its third plant in Mexico. Operations started in November 2013. A total of USD 2 billion was invested in the first phase of construction. Initially, the new plant has an annual capacity of 175,000 units. At the plant, Nissan is assembling the Sentra compact car, which is exported to more than 20 countries. With the third plant coming on stream, Nissan's annual production capacity in Mexico expanded from 680,000 to 850,000 units. The automaker's midterm goal is to produce 1 million vehicles per year in the country.|
|Launch of Leaf electric vehicle||In June 2014, Nissan has released the Leaf in Mexico, the first 100 percent electric vehicle to be marketed in the country. In Mexico, the Leaf is available in a version with Around View Monitor, a fast-charging port, leather seats, a 7-inch touch screen and many other features. Initially, the Leaf will be distributed only through Nissan's certified dealership network in Mexico City. In addition, Nissan is striving to develop the infrastructure for charging electric vehicles. Nissan and the Government of the State of Morelos have taken the initiative to create the first electric corridor (charging station network) in Latin America that will be located between Cuernavaca and Mexico City.|
Honda to produce HR-V following Fit at new plant; new CVT plant to be constructed
|Production starts at new plant||Honda started production of the new Fit at a new automobile plant in Celaya, Guanajuato, in February 2014. With an investment of USD 800 million, the new plant has an annual capacity of 200,000 units. It has adopted the latest manufacturing technologies developed at Honda's new Yorii plant in Japan. With the Celaya plant starting operations, Honda's annual production capacity in Mexico expanded to 263,000 units and that in North America increased to 1.92 million units. As a result, more than 95% of the Honda and Acura vehicles sold in North America will be produced locally.|
|HR-V to be built at Celaya plant||Honda unveiled the name and photo of the HR-V (known as the Vezel in Japan), a new compact SUV, at the New York International Auto Show held in April 2014. Built on the same platform that underpins the Fit subcompact, the HR-V is positioned below the CR-V in both size and price. The HR-V is planned to be launched in North America in early 2015. Production of the compact SUV will start at the end of 2014 at the Celaya plant where the Fit is assembled.|
|New CVT plant to be constructed||Since September 2013, Honda's new transmission plant has been under construction at the same site of the Celaya vehicle plant with an investment of USD 470 million. The automaker plans to start production of CVTs in the second half of 2015. Initially, the plant's annual capacity will be 350,000 units. Honda plans to raise the annual capacity to 700,000 units in the future. With this plant coming online, Honda's annual production capacity of transmissions in North America will increase to 1.7 million units in 2016 and to more than 2 million units when the Mexican plant reaches full capacity.|
Mazda starts production of Mazda3; Mazda2 and Toyota vehicle to be built at new plant
|Mazda has built a new plant in Salamanca, Guanajuato. This is Mazda's first overseas plant in 28 years and the most important global strategic base for the structural reform plan. Production of the Mazda3 (sold as the Axela in Japan) started in January 2014. The plant is expected to add production of the Mazda2 (sold as the Demio in Japan) by the end of 2014 and a Toyota compact car based on the Mazda2 in the summer of 2015. Initially, the plant's annual capacity is 140,000 units, and will be boosted to 230,000 units by March 2016.|
|Mazda's new plant is a joint venture established with Sumitomo Corporation. The plant represents not only a production base for Mexico and the U.S., but also an export base to Latin America and Europe. It consists of an integrated vehicle production plant and an engine assembly plant. In October 2014, an engine machining plant, which is under construction with an additional investment, will start operations. This plant will manufacture cylinder blocks and cylinder heads. Initially, Mazda will locally procure 50% of the components of Mazda vehicles at its new Mexican plant. However, Mazda will raise the local content to 62.5% within five years. A total investment will amount to USD 770 million.|
Mitsubishi Motors to supply Thai-made Attrage to Chrysler de Mexico
|Mitsubishi Motors and Chrysler de Mexico signed an agreement that Mitsubishi will supply the Attrage global compact sedan to Chrysler for five years starting in November 2014 (announced in July 2014). Mitsubishi is projected to annually supply more than 10,000 units of the Attrage produced at its Laemchabang plant in Thailand. Chrysler will distribute the vehicle under the Dodge brand only in Mexico.|
|Mitsubishi has been distributing its vehicles in Mexico through Chrysler de Mexico since 2003. In addition to supplying the Attrage, Mitsubishi plans to distribute 3,000 units of the Mirage hatchback, a base model of the Attrage, per year under Mitsubishi brand in Mexico. With this agreement, Mitsubishi aims to enhance the operating rate at its Thai plant.|
Sales Forecast by LMC Automotive: Mexican sales to increase to 1.27 million units in 2017
|(LMC Automotive, Quarter 2, 2014)|
The Mexican market made a solid improvement in 2013, with total light vehicle sales returning to the one million-unit level for the first time since 2008. Sales increased by 7.7% to just below 1.06 million units in 2013. Since the beginning of this year, however, sales growth has stalled. Due to the weaker-than-expected sales through April and a slow economic recovery in both Mexico and the US, Mexican sales are now projected to be 1.06 million units in 2014, virtually flat from last year.
As for the medium- and long-term outlook, the country's young and growing population will continue to help boost sales, while the market's already relatively light vehicle density will constrain sales growth over the long term. Sales are expected to increase by 5-6% over the next three years and will reach 1.27 million units in 2017. Successful implementation of structural reform, such as the privatization of the oil sector, could boost both the economy and vehicle sales more than we currently expect.
Mexican light vehicle sales forecast by make
|SALES GROUP||GLOBAL MAKE||2011||2012||2013||2014||2015||2016||2017|
|Fiat-Chrysler Group Sub-total||60,859||65,490||65,459||67,039||77,683||76,611||89,668|
|Ford Group Sub-total||86,323||82,468||85,864||86,759||100,186||106,382||109,439|
|General Motors Group||Chevrolet||161,484||179,418||193,072||183,268||188,752||212,085||223,977|
|General Motors Group Sub-total||168,405||186,523||201,604||193,290||200,355||224,564||237,430|
|BMW Group Sub-total||9,639||11,701||13,523||13,186||14,633||15,726||16,964|
|Daimler Group Sub-total||9,165||10,724||10,547||11,964||16,467||17,885||18,581|
|Volkswagen Group Sub-total||153,550||165,229||189,991||196,103||195,712||209,798||219,374|
|Renault-Nissan Group Sub-total||247,611||271,064||285,280||298,531||296,362||308,009||310,248|
|Honda Group Sub-total||36,199||54,492||60,951||54,891||65,296||68,646||81,792|
|Fuji Heavy Industries||Subaru||587||283||533||891||855||950||992|
|Tata Group||Land Rover||613||927||1,357||1,510||1,447||1,509||1,592|
|Tata Group Sub-total||667||1,044||1,500||1,684||1,664||1,961||2,132|
|Geely Group Sub-total||1,321||1,495||1,565||1,542||2,500||2,929||3,811|
|Source: LMC Automotive "Global Automotive Sales Forecast (Q2 2014)|
|(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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