Mexico’s light-vehicle production continues to see impressive growth as OEMs announce another series of investments in the region. Conditions are currently favourable for the region, with Mexican automotive plants outproducing those in Brazil, a trend likely to continue over the next few years.
Investments by automakers and component suppliers continue in the country, with BMW committing to 50% local content and PPG announcing a USD27 million to expand its installed production capacity in Queretaro this September. In August, Daimler and Renault-Nissan broke ground on construction of their joint-venture plant in early September. After Toyota and GM announced investments, Ford announced investment in engine and transmission production, and Jaguar Land Rover (JLR) is reported to be considering production in the country. Suppliers also continue to expand their facilities in the country.
Mexico's auto industry continues to see production gains. There were 278,781 light-vehicle units built in Mexico in September, a 4.1% gain over September 2014. Only VW reported a decline in production in September; output dropped by 35.2% to 26,773 units, with the impact likely to be caused by issues surrounding diesel engines being out of compliance with US EPA regulations.
Mexico's light-vehicle production continues at record levels, with a 6.5% gain in the year to date in September. Nissan continues to lead Mexico in production, with YTD production up 1.5% to 617,034 units.
|
|
Sep 2015 |
Sep 2014 |
Y/Y % change |
YTD 2015 |
YTD 2014 |
Y/Y % change |
|
Production |
278,781 |
267,674 |
4.1 |
2,552,921 |
2,396,308 |
6.5 |
Meanwhile, further investments by automakers and component suppliers in Mexico bode well for the country as a production base in the future. Mercedes has also indicated that it is looking to set up a new supplier network to support both the Mercedes and BMW luxury brands.
Mexico's strategy has created an export production base, taking advantage of the internal resources of the country as well as some transportation advantages. However, though the production and supply base is embedded in the country at this stage, there are still some structural issues for suppliers. Tier one suppliers still rely on imports as the local tier two and raw material supply base are still underdeveloped; an issue that Mexico’s trade associations know only too well.
The Industria Nacional de Autopartes (INA), the Mexican association of auto parts manufacturers, is pushing for a stronger tier-2 supplier base in the country. According to INA, Mexico produced USD76.8 billion worth of automotive parts in 2013. Imports during the year reached USD38.8 billion, up 7% y/y over 2012; imports mainly comprised items such as copper, aluminium, alloy cable and wire, tiers, seat and seat parts, harnesses, steering column parts, and disc brake mechanisms.
After increasing 9.9% to 3.21 million units in 2014, IHS Automotive forecasts Mexican light-vehicle production growth to be more moderate in 2015, reaching 3.40 million units. However, as new plants come online in 2016 and 2017, output is forecasted to reach 4.48 million units in 2018. Mexico eclipsed Brazilian output in 2014 and is forecasted to remain ahead throughout the forecast period, in part on slowing markets in Brazil and Argentina.
