UK-based automotive components supplier GKN plans to invest USD300 million to expand operations in Mexico, according to a local news report. The investment will be made over three years and will expand annual production of driveshafts to 10 million units, up from the current capacity of 8 million units. The plan reportedly includes a new plant in Guanajuato, where local assembly is running at full capacity.
GKN supplies 13 automakers in the United States and Mexico, and has invested USD233 million on plant expansion since 2005. The company's customers include Ford, General Motors (GM), Honda, Renault-Nissan, and Volkswagen (VW).
Significance: GKN has expanded its presence in many automotive markets and sees Mexico as a significant growth market. The company is focusing on high-growth markets, including India as well as Mexico, although investment in North America has also included expansion of a facility in North Carolina, United States, which produces geared components.
IHS Automotive forecasts GKN's North American production to increase from 17 million units in 2014 to 18.4 million units in 2020, with Mexican output increasing from 3.2 million units in 2014 to 4.7 million units in 2020. Contributing to the increase in GKN's output is use of production in the North American Free Trade Area (NAFTA) region for supplying export markets. In 2014, only 14.5% of NAFTA automotive production is due to be exported from the region. In 2020, this figure is forecasted to increase to 20.8%.
Over the period, Honda's production is forecast to increase by about 234,000 units, including 200,000 units built in Mexico, while Ford and GM are forecasted to see small declines in North American production. VW's production, particularly with the addition of the Audi Q5, is expected to increase by about 358,000 units in the region. With these figures, demand for supplier capacity is also expected to increase.
