Mexico becoming export hub for Detroit 3, Nissan and VW

Exports of 1.86 million units in 2010, of which 1.63 million were exported to the Americas

2011/03/15

Summary

 Mexican export volume expanded to 1.86 million units mostly to the largest importer US in 2010, up by 52% over the previous year. Accordingly, production volume increased to 2.26 million units, up by 50%.

 Labor cost in Mexico is said to be one tenth of that in the US. While a ratio of small cars to total sales in North America gets larger, Detroit 3, Nissan and VW plan to strengthen Mexico as a center of production for the Americas.

 GM plans to add new model vehicles, four-cylinder and eight-cylinder engines to its production. Ford began to produce Dual Clutch Transmission and the Fiesta, respectively, in March and May 2010. Chrysler started production of the Fiat 500 in December.

 Nissan plans to increase production capacity of the two plants in Mexico to 700 K units, and produce up to 300 K units of the new March/Micra-based models per year. VW will expand the Puebla Assembly Plant and built a new engine plant in Silao. In addition, VW's Chattanooga Plant in Tennessee, USA, will begin production in the latter half of 2011. These are VW's strategic movements to sell one million units in the US in 2018.



Mexico's production (2.26 million units) and export (1.86 million units) refresh records in 2010

 In 2010, Mexico's production and export refreshed records of total 2.26 million units (except medium- and heavy-duty commercial vehicles) and 1.86 million units, respectively, up by about 50% over the previous year levels.

 In Mexico, light vehicles of 819 k units were sold in 2010, up by 66 k units over the previous year. However, sales remained below pre-2008 levels of over one million units.

Production, sales and export of light vehicles in Mexico

(in units)
  2004 2005 2006 2007 2008 2009 2010
Production 1,507,175 1,605,936 1,978,771 2,022,241 2,102,801 1,507,527 2,260,776
Domestic sales 1,089,665 1,125,418 1,132,783 1,093,352 1,020,492 752,552 818,785
Export 1,094,306 1,186,346 1,536,768 1,613,313 1,661,619 1,223,333 1,859,517
Export/Production 72.6% 73.9% 77.7% 79.8% 79.0% 81.1% 82.3%
Source: AMIA (asociacion mexicana de la industria automotriz, a.c.) report for production and export, and Ward's Automotive Yearbook/Reports for domestic sales.
NOTES: 1. The above data show total of passenger cars and light trucks, but exclude medium- and heavy-duty trucks and buses.
2. As shown in the records in January 2011 of production volume of 199 K units (up by 20.8%) and exports of 165 K units (up by 44.5%), both production and exports remain strong.
3. At the end of this report, production and sales volume by OEM are shown.

 

 Light vehicles are being produced in Mexico by the Detroit 3, three Japanese companies and VW. The production of the Detroit 3 was up by 60 to 70% compared to 2009 levels (Nissan's production was up by 43% and VW by 36%). Export accounted for 83.0% (1.88 million units) of the 2010 production volume.

 Overall export from Mexico reached 1.86 million vehicles, of which 1.28 million units were exported to the US. When adding export to Canada and Latin America, these OEMs exported 1.63 million units. There has been a noticeable shift of the auto supply base in the Americas to Mexico.

Production volume for domestic sales/for export by OEM (2009 - 2010)

(in units)
  Production For domestic sales For export
2009 2010 2010/2009 2009 2010 2009 2010
GM 350,534 559,350 159.6% 69,628 98,073 280,906 461,277
Ford 234,330 393,649 168.0% 2,960 10,368 231,370 383,281
Chrysler 157,082 257,319 163.8% 22,629 27,052 134,453 230,267
VW 319,743 434,685 135.9% 47,692 73,654 272,051 361,031
Nissan 355,414 506,494 142.5% 127,941 161,819 227,473 344,675
Toyota 42,696 54,278 127.1% 0 0 42,696 54,278
Honda 47,728 55,001 115.2% 10,164 14,026 37,564 40,975
Total 1,507,527 2,260,776 150.0% 281,014 384,992 1,226,513 1,875,784
Source: AMIA (excluding medium- and heavy-duty trucks and busses)
NOTE: AMIA releases production volume in Mexico by dividing it between vehicles for domestic sales and exports. There are some disparities between the production volume of vehicles to be exported and the actual exported volume as shown in the table below.
 

Export volume by destination

(in units)
2009 2010 Change
USA 878,742 1,277,184 398,442
Canada 98,949 142,800 43,851
Latin America 104,073 206,468 102,395
Africa 0 9,494 9,494
Asia 12,333 36,558 24,225
Europe 126,515 170,713 44,198
Others 2,721 16,300 13,579
Total 1,223,333 1,859,517 636,184


 The table below lists assembly plants of the seven companies in Mexico, which locally produce light vehicles. Regarding their trends in 2010, GM's Silao Plant and Chrysler's Saltillo Plant which produce full-size pickup models increased their production thanks to the recovery in the US. GM's Cadillac SRX launched in the middle of 2009 and Chrysler's Dodge Journey boosted production of the GM Ramos Arizpe Plant and the Chrysler Toluca Plant, respectively.

 Production of the Nissan Tiida/Versa was up to 235 K units from 126 K units in 2009 and the VW Jetta to 382 K units from 267 K units.

Production volume of light vehicles and major production models by OEM and assembly plant

Plants Production Major production models
2009 2010
GM Ramos Arizpe 134,554 231,956 Cadillac SRX (since the middle of 2009) and Chevrolet Captiva
Silao 173,780 272,340 Chevrolet Silverado and GMC Sierra
Toluca 5,420 0 Chevrolet Silverado/Kodiak (till 2008);
the plant closed; in January 2011, GM announced
that the Toluca Plant will produce small engines.
San Luis Potosi 36,801 55,141 Chevrolet Aveo
GM total 350,555 559,437  
Ford Hermosillo 231,415 313,030 Ford Fusion, Lincoln MKZ and Mercury Milan
Cuautitlan 0 77,358 Ford Fiesta (since May 2010)
Ford total 231,415 390,388  
Chrysler Saltillo 70,031 117,773 Ram Pickup and Ram Pickup medium-duty
Toluca 87,976 140,010 Chrysler PT Cruiser (till July 2010), Dodge Journey, and
Fiat 500 (since December 2010)
Chrysler total 158,007 257,783  
VW Puebla 320,701 435,336 VW Beetle/Cabrio, Bora and Jetta
Nissan Aguascalientes 227,965 334,252 Nissan Sentra, Tiida/ (US) Versa
Cuernavaca 127,449 172,238 Nissan Chassis, Pickup, Sentra, Tsuru and Tiida/Versa
Nissan total 355,414 506,490  
Toyota Tijuana 42,696 53,829 Toyota Tacoma
Honda EL Salto 47,787 55,001 Honda CR-V
Total 1,506,575 2,258,264  
Source: Ward's Yearbook, Ward's Automotive Reports on January 31, 2011
NOTES: 1. The above production results by Ward's do not correspond to the data released by AMIA.
2. Besides the above seven companies, Isuzu, Hino, Daimler, Volvo Trucks, Scania, MAN, Paccar and Navistar produce medium- to heavy-duty commercial vehicles. Their production amounted to 87 K units in 2010.

 



Vehicles made in Mexico increased to 19.3% of total production in North America in 2010

 Vehicles made in Mexico gradually increased from around 10% a few years ago, 16.8% in 2008 to 19.3% in 2010 of total production in North America (US, Canada and Mexico). As for Detroit 3, production volume there increased from 15.1% in 2008 to 18.0% in 2010. Each OEMs plans to expand production further in Mexico to realize profits while producing small cars.

 Mexico provides OEMs with a number of advantages for production, including one tenth the personnel cost of the US, bordering on the US, FTA (Free Trade Agreement) with more than 30 countries and regions such as the EU and Japan, a level of quality which satisfies US and Canadian markets.

 However, it is reported that GM and Chrysler have incurred much public criticism for increasing local employees in Mexico, while closing many of their US plants and axing jobs. This geographic shift in production comes despite the fact that they have received an enormous amount of emergency aid paid by US tax payers via the US government after filing for Chapter 11 in 2009.

Production volume by country in North America between 2008 to 2010

(in units)
  Production Ratio
2008 2009 2010 2008 2009 2010
All OEMs Mexico 2,167,944 1,561,052 2,342,282 16.8% 17.8% 19.3%
USA 8,672,141 5,709,431 7,737,502 67.1% 65.2% 63.7%
Canada 2,082,241 1,490,482 2,068,227 16.1% 17.0% 17.0%
Total 12,922,326 8,760,965  12,148,011 100.0% 100.0% 100.0%
Detroit 3 Mexico 1,085,063 736,277 1,200,708 15.1% 16.4% 18.0%
USA 4,841,645 2,953,197 4,141,373 67.5% 65.8% 62.1%
Canada 679,540 418,662 531,463 17.4% 17.7% 19.9%
Total 7,177,871 4,485,510 6,667,639 100.0% 100.0% 100.0%
Source: Ward's Automotive Reports on January 31, 2011
NOTES: 1. The data above include medium- and heavy-duty commercial vehicles.
2. For more information, the above OEMs produced a total of 1.55 million units in Mexico in 2004 (9.6% of the overall production in North America) and 2.04 million units in 2006 (12.9%).
3. Hourly wages for auto plant employees is four dollars or lower in Mexico vs. 50 to 55 dollars in the US, including benefit costs.

 



GM unveils plans to produce new model vehicles, four-cylinder and eight-cylinder engines

 GM has been producing vehicles at three plants in Mexico (the three are the Ramos Arizpe, San Luis Potosi and Silao Plants; the Toluca Plant has been closed since early 2009). Thanks to the recovery of the US light truck market, GM's production was up from 350 K in 2009 to 560 K units in 2010.

 It is said that GM invested five billion dollars in Mexico between 2006 and 2010. In addition, GM unveiled the plan to make an additional investment of 540 million dollars in the Toluca Plant-closed since the beginning of 2009-to produce fuel-efficient 1600 cc and 1800 cc gasoline engines. GM will also produce new model vehicles and eight-cylinder engines at the Ramos Arizpe Plant.

GM plans to produce energy efficient engines at the Toluca Plant

 According to the news report in January 2011, GM will invest 540 million dollars in the Toluca Plant in the central part of Mexico to produce aluminum engine parts, followed by energy-efficient four-cylinder engines of 1600 and 1800 cc. These engines will be mounted on vehicles produced in Mexico. GM has not said when production of the new engines would begin or in which models they would be used.
 The Toluca Plant had produced the Chevrolet Silverado and the medium truck Kodiak. Due to the financial crisis, GM ended production of both low-mileage models and closed the plant in the beginning of 2009.
GM to produce new model vehicles and eight-cylinder engines at the Ramos Arizpe Plant
 GM announced an investment of 500 million dollars in the Ramos Arizpe Plant in the northern part of Mexico to produce eight-cylinder engines and new model vehicles. It will spend 284 million dollars for production of SIDI (Spark-ignition Direct-Injection) eight-cylinder engines, and 215 million dollars for updating facilities to produce new model vehicles. According to GM, new models will be produced starting in the fourth quarter of 2011.

Source: Media reports

 



Ford starts production of 6-speed Dual Clutch Transmission (DCT) and the Fiesta

 In March 2010, Ford began to produce six-speed DCT at the transmission plant built in Guanajuato with Getrag. The six-speed DCT will be mounted on the Fiesta and the Focus which will be launched in 2011.

 Ford began to produce the Fiesta at the Cuautitlan Plant in Mexico in May 2010, and released it in the US that summer. This is the first step to give "ONE Ford Plan (development of products using global platforms)" life in North America with the new Focus to be released in the first quarter of 2011.

 Ford will invest three billion dollars in total since 2008 in three production projects in Mexico for the Fiesta, the dual-clutch six-speed transmission, and a diesel engine at the Chihuahua engine plant.

Ford to invest 3 billion dollars in Mexico since 2008

 Ford plans to invest three billion dollars in three projects: (1) production of the Fiesta at the Cuautitlan Plant, (2) production of diesel engines at the Chihuahua Plant (Note), and (3) production of dual clutch transmission at the Guanajuato Plant built with Getrag.

NOTE: Ford spent 838 million dollars to build the Chihuahua second engine plant, and began production of the V8 6700-cc turbo diesel engine for the F-Series Super Duty vehicle in November 2009. It has an annual production capacity of 200 k engines. The first plant produces four-cylinder 2000 cc and 2500 cc engines at an annual production capacity of 428 K units.

Ford begins production of 6-speed Dual Clutch Transmission (DCT) with Getrag
 In March 2010, Ford began production of the six-speed Dual Clutch Transmission (DCT - Ford's product name is PowerShift) at the Guanajuato Plant built by Getrag America. Getrag America is a joint venture company established by Getrag and Getrag Ford Transmissions (joint venture to produce transmissions in Europe). Getrag America supplies the engine to the Cuautitlan Plant, which has produced the Fiesta, and the US Michigan Assembly Plant, which will produce the Focus from 2011.
 In Europe, the Focus 2000-cc diesel engine model is equipped with a dual wet clutch transmission. In Mexico, Ford will produce a dual dry-clutch transmission which does not need fluid. The dry-clutch transmission is designed for low-torque vehicles, while it is more fuel efficient and low cost.
 The Fiesta is equipped with a 1600-cc Ti-VCT engine. The DCT model Fiesta has a fuel efficiency of 29 mpg city, 38 mpg highway driving and 33 mpg combined, and is more fuel-efficient than MT vehicles (28 mpg city, 37 mpg highway or 32 mpg combined). For the information, the Dual Clutch SFE (Super Fuel Economy includes improved aerodynamics and power saving type tires) package has a fuel efficiency of 29 mpg city, 40 highway and 33 combined.
Production of the Fiesta begins at the Cuautitlan Plant
 In May 2010, Ford began production of the four-door sedan and five-door hatchback Fiesta for the US, Canadian and Mexican markets at the Cuautitlan Stamping and Assembly Plant. Ford released these models in the summer of 2010 in the US.
 The Cuautitlan Plant ended production of the F-Series at the end of 2008. It was enlarged by 25,800 square meters to implement a new press line, coating line and 270 robots. With production of the Fiesta, Ford created 2,000 jobs.

Source: Ford press releases on March 29 and May 11, 2010

 



Chrysler: production of Fiat 500 starts in December 2010

 Chrysler ended production of the PT Cruiser at the Toluca Plant in July 2010, and started production of the Fiat 500 in December of the same year. In the US, the Fiat 500 will be sold at 130 dealers of the Chrysler Group.

 Chrysler invested 550 million dollars in the Toluca Plant, planning to produce up to 130 K units of the Fiat 500 per year. It is deemed as a key for Chrysler to make turnaround.

Chrysler invests 550 million dollars and produces Fiat 500 at Toluca Plant in Mexico

 Chrysler, in February 2010, announced an investment of 550 million dollars in the Toluca Plant in Mexico. Production of the Fiat 500 started at the plant in December of the same year. Details are unknown but Chrysler plans to produce 130 K units of the model per year for the US and Latin American markets.
 In the US, the Fiat 500 will be sold at 130 dealers of the Chrysler Group. About 50 dealers will launch the Fiat 500 in March, and then all 130 dealers by the end of 2011. Chrysler will first launch the four-seat two-door hatchback model, and the convertible version in 2011, which will also be produced at the Toluca Plant. There are plans to launch an EV model equipped with a lithium ion battery in 2012.
 As for the engine for the Fiat 500, the Dundee Plant, Michigan State of the US, will produce the 1400-cc FIRE engine developed by Fiat (equipped with the MultiAir system to improve performance and fuel efficiency). The Dundee Plant will supply the engine to the Toluca Plant.
Production of the PT Cruiser ended in Mexico
 Chrysler ended production of the PT Cruiser at the Toluca Plant in July 2010. Chrysler launched the PT Cruiser in the beginning of 2000. Its retro-flavored style became popular. Production peaked at 205,526 units in 2001 (most of them were exported), and sunk to 12,490 units in 2009 and 11,083 units from January to July, 2010.

Source: Automotive News on July 26, 2010 and January 31, 2011

 



VW to invest 2 billion dollars in Mexico between 2008 and 2013

 VW invested about one billion dollars in Mexico from 2008 to the middle of 2010. It announced a further investment of one billion dollars to be made by 2013.

 VW plans to sell one million units in the US in 2018, saying that the US market will remain one of the biggest and most important markets for the auto industry (the 2009 and 2010 sales were 300 K units and 360 K units, respectively).

 In July 2010, VW expanded the production capacity of the Puebla Assembly plant in Mexico to 525 K units, and began production of the new Jetta. The Puebla plant will also produce the new Beetle.

 From the latter half of 2011, VW will also produce a new midsize sedan (the next generation Passat) at the Chattanooga Plant in Tennessee State of the US. The new Jetta and the new Passat were developed to primarily suit the preferences of US customers. VW says that they will significantly contribute to sales of one million units in the US.

 VW will build a new engine plant with an annual production capacity of 330 K units in Salio of Mexico. The plant will start production from 2013, and supply engines to the Puebla and the Chattanooga Plants.

VW to strengthen production capacities in Mexico and the US for sales of one million units in the US in 2018

VW starts production of the new Jetta at the Puebla Plant, with plans to also produce the new Beetle
 VW started operations on the new line of the Puebla Plant to produce the new Jetta in July 2010. The annual production capacity of the Puebla Plant has been expanded to 525 K units, and now is one of VW Group's largest plants. The Puebla Plant produces the VW Jetta for the US and other models for Mexico and Latin America. VW says that the Puebla Plant will continue to play a key role as a production center for compact-class vehicles in North American markets.
 VW has invested about one billion dollars in the Puebla Plant between 2008 and the middle of 2010 in modernizing and expanding its facilities and in developing the new VW Jetta. The new Jetta will have 70% local content in parts.
 VW plans to make another investment of one billion dollars in the next three years. As part of the investment plan, VW will fully remodel and launch the Beetle in autumn 2011. The New Beetle will have the platform common to the Jetta as the current model and both of them will be produced only at the Puebla Plant of VW's plants in the world.

NOTE: The Jetta is a Golf class four-door sedan. The new Jetta was unveiled for the first time at the Chicago Motor Show held in February 2011. It will be equipped with 2000-cc turbo engine and six-speed MT or six-speed dual clutch transmission. The price of the base model will be set at 23,495 dollars.

VW to build a new engine plant in Silao of Guanajuato State
 VW will spend 550 million dollars to build a new gasoline engine plant in Silao City of Guanajuato State. It will create an annual production capacity of 330 K units in 2013, and supply engines to the Puebla Plant and the Chattanooga Plant in Tennessee, USA, which will start production in the latter half of 2011. According to VW, engines to be produced at the Silao Plant will set a benchmark in both terms of fuel consumption and emission gas performance.
Source: VW press releases on July 7, 2010 and September 22, 2010, and Automotive News on September 27, 2010
NOTES: 1. The US Chattanooga Plant will produce the newly developed midsize sedan from the latter half of 2011 (VW calls it as "New Midsize Sedan" or "NMS"). It will be positioned as a successor model of the Passat and the name of Passat will be succeeded to the NMS.
2. The new Jetta to be produced at the Puebla in Mexico has been based on the global model Jetta, and tailored for North America. The "Passat" to be produced at the Chattanooga Plant from the latter half of 2011 has been separately designed from the Europe spec model and exclusively for North America. It is larger than before to compete with the segment leader Toyota Camry and Honda Accord (2010 sales of the Passat in the US hovered at 12,497 units).

 



Nissan plans to produce the Micra Series in Mexico

 Nissan produces the Sentra, Tiida/Tiida Latio (US model name is Versa) at its two plants in Mexico. Production volume expanded from 360 K units in 2009 to 510 units in 2010.

 Planning to establish a key supply center to the Americas, Nissan will invest 600 million dollars in its two plants in Mexico to increase its production capacity to 700 K units (the current capacities are 350 K units of the Aguascalientes Plant and 250 K units of the Cuernavaca Plant). It is said that Nissan plans to begin production of the new Micra hatchback from 2011 and produce 300 K units in 2013 by adding sedan and multipurpose models, exporting 80% of them to the Americas.

 Nissan is expected to introduce the EV Leaf for taxi use in the Mexican Market in the latter half of 2011.

 



News report says Mazda's new plant to be built in Mexico

 In November 2010, news report said that Mazda plans to build a new plant in Mexico with Sumitomo Corporation, to start production of compact cars at the 100 K-unit scale as early as 2013, and also to make inroads to emerging markets such as Brazil. Mazda, however, commented that the news report was not announced by Mazda, and it did not have any specific and concrete facts to release.

 It is said that the alliance between Mazda and Ford is weakening, and Mazda is likely to develop emerging markets on its own.

 



Mexico: Production and sales volume by OEM

 GM and Nissan compete for the top of light vehicle production volume by OEM. Nissan won first place in 2007 and 2009, but GM won it back in 2010. The followers are Nissan, VW, Ford and Chrysler.

Production volume by OEM

(in units)
  2004 2005 2006 2007 2008 2009 2010
GM 486,076 428,443 502,544 467,667 508,748 350,534 559,350
Ford 107,804 147,629 349,910 304,137 314,231 234,330 393,649
Chrysler/Fiat 341,575 343,748 313,387 283,960 280,147 157,082 257,319
VW 225,342 299,862 347,020 409,566 449,096 319,743 434,685
Nissan 324,554 362,722 408,439 498,288 449,447 355,414 506,494
Toyota     33,209 32,249 49,879 42,696 54,278
Honda 21,824 23,532 24,262 26,374 51,253 47,728 55,001
Light Vehicles Total 1,507,175 1,605,936 1,978,771 2,022,241 2,102,801 1,507,527  2,260,776
Medium- and heavy-duty Trucks 69,014 84,418 92,284 86,342 78,933 56,642 86,748
Grand Total 1,576,189 1,690,354 2,071,055 2,108,583 2,181,734 1,564,169 2,347,524

Source: AMIA

 

 In Mexico, sales of light vehicles expanded from 752 K units in 2009 to 819 K units in 2010. Of the total, 543 K units (66.4%) were made in Mexico and 276 K (33.6%) were imported.

 As for the 2010 sales volume by OEM, Nissan sold 208 K units, GM 156 K, VW 130 K and Ford 88 K. Nissan produces vehicles for the Mexican market more than its rivals (162 K in 2010 followed by GM's production of 98 K). It has kept first place in sales volume in Mexico.

Sales volume of light vehicles by OEM

(in units)
  2004 2005 2006 2007 2008 2009 2010
GM 234,515 243,932 242,247 227,845 210,469 138,352 155,580
Ford 181,987 195,956 182,535 152,683 128,504 88,748 87,533
Fiat-Chrysler 122,242 127,793 129,482 131,841 119,341 85,845 81,076
VW 196,763 174,082 159,131 153,809 137,704 117,960 129,483
Renault-Nissan 258,944 259,018 248,589 232,734 228,082 167,686 207,564
Toyota 23,876 35,318 60,088 66,208 63,306 51,991 46,769
Honda 29,730 39,351 49,102 54,802 56,264 37,187 39,866
Seven OEMs Total 1,048,057 1,075,450 1,071,174 1,019,922 943,670 687,769 747,871
96.2% 95.6% 94.6% 93.3% 92.5% 91.4% 91.3%
Other OEMs 41,608 49,968 61,609 73,430 76,822 64,776 70,914
Grand Total 1,089,665 1,125,418 1,132,783 1,093,352 1,020,492 752,552 818,785
Place of origin Mexico 647,848 673,601 702,993 697,574 665,173 497,544 543,272
Imported 441,817 451,817 429,790 395,778 355,319 258,008 275,513

Source: Ward's Automotive Yearbook/Ward's Automotive Reports on January 31, 2011

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