Akebono Brake has initiated construction of a new production facility in Mexico, says a company press release. The company’s Mexican subsidiary, Akebono Brake Mexico S.A. de C.V., held the ground-breaking ceremony last week (5 September 2012) in Silao, Guanajuato. The brakes production facility, covering an area of 110,000m2, is expected to start operations in June 2013. The facility, being set up with a paid-in capital of JPY400m (USD5.1m), is likely to generate sales worth JPY4.5bn (USD57.5m) in fiscal 2015.

Significance: The company’s move to build production capabilities in Mexico reflects the growing automotive investments in the country. Akebono Brake currently exports Japan- and US-manufactured components worth USD80m-90m to Mexico. Through a production facility in Mexico, the company targets to supply locally-produced components to its existing as well as new OEM customers in the country. Moreover, many Japan-based OEMs, such as Nissan, Mazda and Honda, have massive plans to increase their production base in Mexico. Many suppliers are expected to follow the OEM investment plans and strengthen their auto parts manufacturing processes in the country. Akebono Brake’s investment is well-timed to meet the demands of OEMs, most of whom are expected to start their plants in Mexico during 2013-14. Further, a growth in automotive market in the US, has spurred investments by many suppliers and OEMs in Mexico – US is the biggest automotive export market for Mexico, accounting for more than 60% share. According to IHS, vehicle production in Mexico is expected to touch 3.7 million units in 2015, a 48% growth over 2011 levels.