Mexico's Auto Market A Runaway
Growth has OEM’s
ramping up
investments in a
major way.
by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodpub.com
Mexico’s ever-expanding automotive market is setting new production records as international OEM investors pour more money into the country. Mexico is able to compete with China, given close
proximity and cultural ties to the United States, so
supply chain investments also are on the rise. As a
result, some U.S. cities, like San Antonio, Texas,
are positioning themselves as distribution and
management hubs servicing Mexico’s transportation arteries into automotive production centers.
Mexico’s production of cars and light trucks
hit a record high over the first five months of
this year at 1.15 million units, up 12. 5 percent
over the prior year period, according to Asocia-cion Mexicana de la Industria Automotriz
(AMIA), the national automobile industry association. Exports of 946,000 vehicles were up
13. 7 percent in the same comparison. And domestic sales were up 17 percent to 80,000 vehicles in May, compared to May 2011.
The top five global automotive paint suppliers
to Mexico’s automotive industry—DuPont, BASF,
PPG, AkzoNobel, and Sherwin-Williams, according to a new sector study by ReportsnReports—
will be able to add sales volume by sectoral
expansion as well as competition. Mexico, which
is already the fifth-largest vehicle exporter and the
eighth-largest producer in the world, is poised to
move up in global automotive rankings.
Among new OEM investments, Nissan announced plans to invest up to $2 billion for a new
manufacturing complex at Aguascalientes, in
Aguascalientes state, in central Mexico. When the
plant opens next year, Nissan will have a one million auto production capacity in Mexico, and will
be the largest OEM in the county. Honda is now
building a new $800 million plant in Celaya, Guanajuato state, also in central Mexico.
Ford also will invest $1.3 billion in its Hermosillo, Sonora state plant in the northwest.
Similarly, Volkswagen’s Audi unit announced in
May that it will invest about €1 billion in a new
SUV plant in Mexico, with a production start in
2016. And Chrysler is expanding its Saltillo,
Coahuila state location in the northeast. Possible OEM investments include a $1 billion joint
deal between Nissan and Daimler to assemble
passenger vehicles for the domestic market and
for export to the U.S. and Canada, with a
startup as early as 2014.
Among parts suppliers, GKN Driveline announced the opening of its third forge in Celaya,
Guanajuato state, in central Mexico, with an investment of $11.5 million, with plans for cumulative investment of $100 million over a
three-year period. Germany’s Hella also will invest $97 million in an Irapuato-based lighting
plant in Guanajuato state, with a 2013 start up.
And Denso Mexico plans to build a new plant in
Silao, Guanajuato state, at a cost of $57 million,
with a 2013 start up.
Such investment has U.S. cities at odds to attract supportive investment. One regional U.S.
initiative to attract funds is the Texas-Mexico
Automotive Supercluster initiative, spearheaded
by Texas’ Bexar County, which consists of the
states of Texas, Tamaulipas, Nuevo Leon,
Coahuila and San Luis Potosi. “Texas is well-positioned to benefit from Mexico’s growing
prominence,” said Caroline Alexander, aconsul-tantat TIP Strategies, in Austin.
“Assembly plants located in Texas can easily
source from suppliers in Northeastern Mexico.
Strong transportation linkages via the NAFTA
Superhighway and rail connections make this
possible. NAFTA as well as numerous foreign
trade zones and inland ports facilitate this cross-border sourcing,” said Alexander, who co-au-thored a study for Bexar County, advocating
automotive investment linked to Mexico. CW
